Top Reasons Agents Should Be Insuring Home Health Care Cyber Exposures

June 20, 2018

Although increasingly more organizations in the health care industry, including those in home health care and hospice, are recognizing the need for Cyber Liability insurance, there are still providers going without this critical coverage. Convincing your home health care clients that this coverage is worth the investment should be an integral part of the insurance review process. Here’s why:

  • With the increasing depth of patient and vendor data health care organizations must store and transmit, the industry has become a prime target for hackers and other cybercriminals, according to a recent NetDiligence report. About 63% of health care breaches were caused by criminal or “malicious activity” with hacking as the most common cause of loss (20%).
  • The extent of breaches occurring in the health care industry is due to the financial gain cybercriminals get from selling or holding hostage for ransom the confidential protected health information (PHI) that providers possess on their patients. This includes patient names; all dates directly linked to an individual, including date of birth, death, discharge, and administration; telephone and fax numbers, email addresses, street addresses, zip codes and county; medical record numbers and health plan beneficiary numbers; certificate numbers or account numbers; Social Security numbers, driver’s license or state identification card numbers; and other data.
  • The cost of a breach runs high in the health care industry. According to NetDiligence, while health care cyber claims comprised 17% of losses in the overall 2017 claims data set, they represented 28% of total breach costs ($65 million of $229 million). The average total crisis services costs for health care was more than three times higher than the average for all other sectors ($676,000 vs. $204,000). Credit and ID monitoring, and notification costs accounted for approximately 70% of health care breach costs.
  • Cyber Liability insurance responds in the event of a loss by providing coverage to pay for the costs typically involved in a breach, such as data forensics, notification expenses and identity monitoring & restoration. Data forensics alone can cost between $500-$1,000 per hour. Also included in the coverage are legal and public relations/crisis management expenses. Without Cyber Liability coverage, these costs would be paid out of pocket by the home health care provider. It’s also important to explain that General Liability insurance does not cover these cyber-related risks, unless specifically added.
  • Additionally, if there is a breach, regulatory fines and penalties for a health care provider can be significant. For example, HIPAA civil penalties can range from $50,000 per violation, up to $1.5 million annually, according to the American Medical Association (AMA). A properly designed Cyber Liability insurance policy can include coverage for HIPPA fines.
  • Cyber insurance can also include access to a breach response team or hotline so that insureds know what to do and how to assess their risk and responsibilities. This serves to help mitigate liability and further limit damages, which is critical in the first few hours of a breach.

These are just some of the reasons why Cyber Liability insurance should be included in a home healthcare provider’s insurance program. In addition, in reviewing the need for Cyber insurance, you are helping to mitigate a potential E&O claim in the event a client has a data breach or other type of cyber loss. As an insurance agent specializing in home health care, you are covering all bases by including cyber in the discussion along with other key coverages such as General Liability, Professional Liability, Non-Owned & Hired Auto, Workers’ Compensation, and others.

Manchester Specialty provides a comprehensive insurance solution that addresses the varied risks the home health care industry faces. We make it easy for agents and brokers to provide this growing health care sector with “all lines” of business insurance coverage, including Cyber Liability insurance. For more information about our products and services, please contact us at 855.972.9399.