Cyber Attacks Are Increasing | Is Your Business Protected? | ep. 114

an essential part of your life if something happens. And there's so many cyber victims out there that happen every day. And you want to make sure that you have the insurance in place that's proper, that's going to compensate you when something happens. So what's something that a business owner may not know about getting cyber insurance?

What would you want them to know that they may not know? I would say it's for them. You're listening to Stimulus Tech Talk, a conversation-based podcast. created by Stimulus Technologies that covers a range of topics related to business and technology.

Hello, Nathan Whitaker here. I'm excited for our Stimulus Tech Talk episode this week. We have a guest that I've known for a very long time joining us today. So I'll introduce Jim Eddington.

He is the co-owner of Western Pacific Insurance. Welcome, Jim. Thank you. Glad to be here.

Read a quick bio on you and then ask you to introduce yourself a little bit more. So he is the co-owner of, as I said, Western Pacific Insurance, an insurance brokerage that helps clients with home, auto life, and business insurance. He works alongside his brother and a great team, and he brings a strong focus on relationships, trust, and helping people protect what matters most. Outside of work, he enjoys spending time with his wife and three children, and he has a deep interest in how the world is changing, especially around sound governance, sound money, and decentralization.

So we're excited to have Jim on Stimulus Tech Talk today. Yeah, kind of interesting. So we're a family business too. My dad, my brother, and I started it.

So how is it continuing working with your brother? How does that work inside your company? Oh, it's awesome. I couldn't ask for a better business partner.

And I'm not just doing that for the podcast. But I didn't really know him very well. Like I knew him as he's my brother, but he's also 10 years older than me, you know? So how that works out in a family, especially a big family like our seven kids, I didn't know him as well as I do now.

And we've just become the best of friends. It's been really neat. He came from a totally different background. He was like a CPA by trade.

I had been CFO of a regional bank. I was on a totally different path. I had done 10 years in the collision repair industry. I own body shops and an auto repair garage.

And so I think we're two of the least likely people to be working together, but here we are. Well, that's awesome. Working with family is sometimes challenging and often the most rewarding thing you can do. So besides working with your brother and family.

Tell us a little bit about yourself and your company. As far as business wise, I had a decade in the collision repair industry, you know, so I was on the claim side. I got to deal with adjusters every single day, but I ended up selling those shops in 2016 and then joined the family agency. So I feel like that claims experience really bears a lot of influence on how I think about coverage now.

I've seen what happens when people find out too late what they actually had for insurance. So I think that's an interesting thing. So people think that they're covered in ways that they're not in their business or personal. And what are some of the surprises that you saw that people were expecting one outcome and they just didn't have the coverage that they were expecting?

Can you give a story about that at all? I saw some of the worst things that happened were on exclusions. In fact, somebody had excluded a member of the family on their insurance. Their claim was denied because they excluded somebody on their policy.

To get somebody excluded, you have to like jump through hoops, you know, on your policy. And unfortunately, they did jump through those hoops, excluded them, and it was denied. And that was a little uncomfortable call. the regional guy for that insurance company.

But thankfully, they took care of it. They're like, yeah, we know it was a disgruntled customer. So don't worry about it. We're going to get it towed out.

There's not having the right coverage in place to make sure that you're getting factory parts put back on your car and getting aftermarket instead. Most insurance policies do allow for aftermarket. And people don't really know that. Usually, it's not that big of a deal.

but people who are real sticklers and they like no i want gm only back on my gm You know it can be problematic and there definitely a price difference And so sadly you get what you pay for and it can be a tough lesson but yeah So thinking about that, I mean, I'm sure that there's business owners that, you know, have these insurance policies. And I know when I get my insurance policy, it's some, you know, hundreds of pages long. And I'm sure there's plenty of exclusions and different things in there that I don't expect.

So as an insurance agency, how do you help businesses understand, you know, the type of coverages they're getting and making sure that they're, you know, fully protected? Well, I mean, we try to start with just, you know, the education side of it, making sure that they really do understand what they're getting into. because every time that we write a policy for somebody, we take the time to explain what they're getting and what they're not getting because those things can be a big surprise at the end.

If you have a claim or when you have a claim, often it's when you have a claim with auto insurance and maybe not quite so often with home insurance, but when you have a claim, it can really bite you. So, yeah, we do take the time to educate business owners on what they're missing. And it's sometimes an uphill battle. I'm sure you can resonate with that.

It's just we try to take the time to do that. So, you know, that's part of the reason why I started doing videos is because there's sort of this education gap that I felt is out there. whether people are watching my videos or not, this is debatable. We just felt like it's really important to get that content out there.

Those videos also can be a support to our clientele. So when something comes up about cyber risk or something like that, we can send it out to a business owner and they can go, oh, that's what this is about. It's maybe a less intimidating conversation because it's pre-recorded and they can uh swear at me or whatever all they want while i'm you know on the video and and not in person oh i doubt they're doing that but just uh and aside how do they find your videos is it are they on youtube how do they find what you've done yeah youtube uh we we started uh i mean we've had a youtube channel going through for some time now but just got serious about it this year it's western pacific insurance on youtube we do post some shorts and stuff across social media try to clip you know the longer form explainers into smaller portions but that's where you'd find us is western pacific insurance on youtube great check it out i mean insurance is kind of like cyber security is super exciting and everybody's you know going out there for their entertainment for it but no it's it's such an important thing to i think business owners have so many different things that they need to know to be successful in their business.

And, you know, some of these things that, you know, you don't think about, they're not part of your day-to-day work, are an essential part of your life if something happens. And, you know, there's so many cyber victims out there that happen every day. And you want to make sure that you have the insurance in place that's proper, that's going to compensate you when something happens. So, you know, what's something that a business owner may not know about getting cyber insurance?

What would you want them to know that they may not know? I would say it's for them. People think that it's only for tech companies. They think it's only for these big companies that you'll hear about a big breach and how much it costs this big company.

But if you have sensitive data for clients, you have some of the biggest risk out there. And we do as an insurance agency, We understand that. So maybe some think that cyber liability only pays for the ransom, but those first party costs, which are like the forensics, the notification, business interruption, legal costs, even credit monitoring, those are often, when you add those up cumulatively, they're bigger than the ransom. So people don't realize that a real cyber liability claim can start from a simple email mistake.

And we had an email mistake toward the end of last year. It happens. It something that could have turned into something much bigger But thankfully we have training and we kind of knew exactly how to react when when it happened Those things can happen just so easily And I think that that would be the first thing that I would say is that it's not limited to, you know, the big companies. This is something that every business should think seriously about.

And that's not fear mongering. That's more of just like risk management. Like when I was first getting married, I got introduced to an insurance agent and he told me, he's like, hey, you're buying a house. You're married.

You don't have an umbrella. You don't have life insurance. And these are things that you need. And he was just straightforward about it.

He didn't even sell life insurance himself, but he's like, make sure that you have that umbrella policy because it's a little bit extra, but it's a huge amount of coverage. And that's kind of how I see the cyber side of things. It's sure it's a little bit extra, but for me, it's this sort of necessity. It's one of those necessary coverage that, yes, it's a sunk cost, but it's something that manages your risk.

Well, I think it almost goes back to the statement you made about cars at the beginning of the conversation is it's not if but when you're going to need it. And I think businesses often think, small businesses think they're too small to be a target. Yesterday, I just had an opportunity to talk to an older individual that got attacked personally and fell victim. And these hackers are going after everyone from individuals to large corporations.

They don't really care. So it's not a if it will happen, it's a when it will happen. There's just a lot of things you don't think about. And I think you rattled off a few that companies don't even think about, about, you know, if you have a breach, you know, especially if, you know, personal information is released, you have to do credit monitoring, you have to, you know, write letters to everybody.

And I think we've all received those letters in the past and wondered, oh, how do they do this? But, you know, hopefully the insurance helps you out with that. And that's one of the things they do, correct? Oh, absolutely.

They have breach response coaching. You could have a cyber attack happen and it's 2 a.m. And many policies include that, you know, where they'll coach you through what to do.

Of course, if I'm being attacked, I am reaching out to my IT company right away. But, you know, they can be very helpful on that side of things. I think you mentioned some things that I think are great is, you know, to get insurance policies now from a cyber liability standpoint. point, you know, there's, it's a lot harder and we're seeing our client, you know, struggling, you know, answering even the attestations that the insurance companies are wanting, you know, they're going from just a simple one page form to like a, you know, we've seen some that are 30 pages or more and, you know, people don't understand it.

So I'm sure you're seeing that with your clients that, you know, there's just so much more in depth that people have to put in place. I mean, it's all the way down to like who you're hiring, where you're hiring them. We're a very global economy now. And so you have people that are working overseas.

How are they accessing your data? There's a lot that goes into cyber liability now, and especially the type of company that you might be. We talked about there's big companies and there's small companies and everything in between, but every company is going to be looked at a little bit differently. And they know when you're an IT company that you've got a big load of risk and that they're going to have to get through and it's going to be a more lengthy application for you.

There's a reason why there's a lot of questions and there's a lot of work sometimes that needs to be done to sort of patch where your gaps are so that you can get to where you can have a cyber liability insurance policy. Are you seeing AI making this any more difficult as companies are implementing AI? This is a curious question. Are you seeing the insurance companies questioning AI usage inside their businesses?

Yeah, it's becoming a question. And it's a concern on how you're using your client data within AI. And I see a lot of companies, especially insurance agencies, because I rub shoulders with fellow agency owners, they're opting to never put any client data into AI unless it's in one that they control. So you know there are ways to sort of have your own AI and have it you know not not connected to the internet but that requires a very special setup and some you know specialized knowledge is becoming less specialized now but it is a concern and it all has to do with that sensitive data and how it might get breached because you know, the, you're not in control of those systems.

Uh, you're not in control of where they're hosting that data and you have no idea when a breach happens, you know, how, how that's going to affect you, because it could be your data. It could be everybody's. And, um, if Claude gets hacked, you know, that's a problem. So.

It's interesting. I don't think companies are thinking about that as much as they should. And kind of go back to what you said a minute ago is, you know, businesses have to have a plan and, you know, creating an AI policy, making sure that it's, you know, your employees are trained on it, trained how to properly use AI. And, you know, there's for sensitive data, especially thinking about having private AI systems that are protected and, you know, that are compliant with, you know, regulations, especially if you're in a regulated industry, you know, some HIPAA or some type of FINRA regulations, you know, it's just important to have that policy in place.

It's, you know, protecting the company and you're following it. So kind of as we wrap up, we're kind of up on time here. I think one of the things that business owners struggle with is balancing costs and understanding what costs go into insurance. You mentioned sunk costs a minute ago, and I think a lot of business owners look at that like, oh, I'm just paying this out.

And it often is a decent size line item on their P&L. How do you talk to companies about that, of understanding this isn't just a sunk cost, this is an essential part of operating a business? How do you balance that? I really approach it from a risk management standpoint.

And I said earlier, it's not really a fear-mongering approach. It just comes from a place of like, for me, it's maybe more of a place of compassion because I'm a fellow business owner. I've had my business on the line. I know what is on the line.

I put my blood, sweat, and tears into my business. And I know fellow business owners do that as well, especially small business owners. When you're just starting out, the last thing you want is something to really disrupt things. And so I see it as, you know, this essential part of your risk management plan.

And, you know, when you can choose a high deductible, I'm talking about any insurance. If you can choose a high deductible and you can afford it, you do the deductible you can afford. Again, it's risk management. You're trying to push risk off onto the insurance company that you don't want to assume.

And it's good to inventory the risks that you have. Know what sensitive data you have. Know what, like think about what it would cost and research it. Research what it would cost to actually, you know, notify clients because there's a certain way that that has to be done.

And it's very expensive on a per client basis. And so if you've got thousands of clients in your database, they've all got to get that communication. And I think just looking at it from that perspective, if you're inventorying it and you know what those risks are and you realize how big of a number that could be potentially, then you see it from sort of the big picture view and you see how little it is in that when you look at it, the big picture. Perfect.

You know, as with all business costs, you know, everything is soaring, but certainly those unexpected costs can really put a business out of business if they don't have, you know, the coverage. And so I like your point of, you know, it's better to get the coverage even if you have to have a higher deductible that you're comfortable covering. But it's better to pay $10,000 versus a half a million dollars if you didn't have the coverage. So I think that's an important thing to think about as business owners.

So as we wrap up, I really appreciate the conversation. People other than watching your videos want to get a hold of you. How do they find Western Pacific? Wpinsure.

com. We're very Google-able, at least here in the Las Vegas area. Western Pacific Insurance. We're in Henderson, Nevada.

And yeah, we'd love to talk with you. All right. Well, thank you, Jim. Great information today.

And please reach out to him if you guys have any questions. And thank you for listening to Stimulus Tech Talk this week. Have a great day, everybody.