All Ears Podcast | Tips to Consider When Buying Cyber Insurance.

In this episode of the Ally All Ears Podcast, Aaron Lee, Senior Director at Ally Dealership Insurance, discusses the growing threat of cyberattacks on dealerships and the importance of staying vigilant. He shares essential tips for safeguarding against these risks and highlights the need for specialized cyber insurance coverage to protect your business.

Advertisement: With nearly 5,000 specialists dedicated to supporting dealer financial services, Ally has the expertise to help you with your retail finance, F&I and remarketing needs. We’re all better off with an ally. Contact your local Ally account executive to get started today. Ally do it right.

Emma Hancock: Hi everyone. Welcome back to the All Ears podcast. I’m Emma Hancock with Automotive News. This podcast is sponsored by Ally Financial and produced by the Automotive News content studio. In each episode, we explore topics that are important to leaders in automotive retailing.

Our guests include experts in their field from Ally, plus dealers from around the country to offer actionable solutions in our ever changing industry. Today, we catch up with Aaron Lee, Senior Director at Ally Dealership Insurance, and we’re talking about cybersecurity. Aaron, thank you so much for taking the time.

Aaron Lee: Thank you so much for having me. It’s great to be here.

Emma Hancock: Earlier this year, you and I caught up on the topic of dealership theft and fraud, especially vehicle thefts. This time around, we’re talking about cybersecurity, and it’s a much harder crime to predict and detect, and dealers want to know how to protect themselves and understand where they could be vulnerable.

What are some potential risks and consequences of cyberattacks?

Aaron Lee: Yeah, that’s a great question. The risk of cyberattacks continues to grow and become more and more relevant as our world becomes increasingly reliant on technology. Customer data breaches is really one of the biggest risks that can be particularly costly.

As you’re dealing with highly sensitive information and personal information, remediation usually requires ongoing monitoring of impacted individuals, often for an extended period of time. And in addition to the cost of analyzing and remediating cyberattacks, dealerships can also face significant reputational damage resulting in lost business from a cyberattack that may have happened to them.

Cyberattacks themselves can affect single rooftops as well as large dealer groups. Smaller dealerships may be a target due to the investment needed in technology to protect them, and older technology that may be present in smaller dealerships. And the risk facing dealerships from cyberattacks can extend beyond even their own data to third party relationships that they rely on to effectively run their own business.

Emma Hancock: It’s really quite alarming when you consider just the scale of the disruption these cyberattacks can cause. It can affect every facet of the dealership’s business, especially the smaller dealerships, as you mentioned Aaron, as they may be targeted even more. Can you share some tips for dealers to consider to help avoid becoming a target?

Aaron Lee: Yes, I’d love to talk about that. A few things to consider that by no means is all inclusive to help avoid becoming a target are things like, for dealerships specifically, they can review the latest FTC guidelines, including the Safeguard rule regarding cybersecurity requirements and ensure that their dealership is in compliance with those updated guidelines.

Another consideration is ensuring software is regularly updated with security patches and also uninstalling old software that’s no longer used and may not be updated anymore because they’re no longer using it. There may be cases where hackers could take advantage of old software that’s still on the system that doesn’t have the proper security patches in order to gain access to the dealership system.

And then a couple of other fairly simple but effective tips and again, by no means an all-inclusive list, are things like locking the computer when you step away from your desk, using strong passwords, and of course, being extra vigilant in watching out for email phishing attempts.

Emma Hancock: But no doubt, being vigilant, that’s easier said than done, and keeping pace with technology and cyber criminals isn’t easy. Aaron, what might dealers look for in coverage for data breaches and other cybersecurity issues?

Aaron Lee: So protection and insurance for cybercrime is really interesting. When looking to purchase insurance for cybercrime, the first thing to consider is where that coverage for that type of event may or may not be available.

Cybercrime and therefore cyber insurance is still relatively new and constantly evolving, and generally the insurance market is very cautious about new things that don’t have a lot of historical data or information to analyze and develop expected trends and patterns. With that, dealers will likely find that most general property and liability coverages may specifically exclude damages related to cyberattacks.

There is a separate market for cyber insurance. However, it is still somewhat limited due to the new and unknown nature of cybercrime. So, when dealers are looking for insurance protection for cybercrime, they may consider including their IT director in discussions regarding this coverage just to ensure that they’re aware of what is and may not be covered and how important and critical that is to their operation.

And dealers, when evaluating coverage, may also consider looking at the limits of coverage available to make sure that they’re adequately protected from potential unforeseen future events. Along with discussing their insurance needs with an insurance professional, dealers can also talk to their OEM or their finance company rep to understand the requirements that they may have for cyber insurance limits and coverage.

We’re seeing more and more cases where OEMs and finance providers are putting specific requirements on cyber insurance, recognizing the risk that cybercrime poses. And then in addition to the aggregate limit on the cyber insurance policies, dealers can also review the sublimits for underlying coverages, and so that could include things like business income, breach notification, financial fraud, things like that. Those sublimits may differ from the aggregate limit on the policy. A dealership may purchase a $1 million cyber insurance policy and that may be referring to the aggregate limit, but there could be sublimits underneath that could be different. So, they may want to consider reviewing those as well.

As I mentioned before, the cyber insurance market is constantly evolving, so it’s important to also review coverages carefully to be aware of any potential changes in their policy, and that includes at renewal, year over year. Being in the insurance business, I’m aware that insurance policies often include a lot of words, and it could be pages and pages of information to sift through, but especially with coverage for something as new and changing as cyber they may want to consider carefully reviewing that policy.

And finally, I’ll just say I can only speak confidently about our own Ally dealership insurance team, but I know that our team is committed to locating and offering the best possible cyber coverage available as part of the comprehensive insurance packages offered through Ally. So, I would encourage dealers to consider reviewing their options with their insurance representative.

Emma Hancock: Aaron, great tips, great advice. It’s pretty clear that cyber insurance, cyber coverage is really a must now, as well as having those protocols in place to help avoid being a target. I want to thank you so much Aaron, you’ve given us such helpful information, such thorough information. That is it for this episode of the All Ears podcast.

I hope everyone found this helpful. I certainly did. On behalf of Ally Financial and the Automotive News Content Studio, thanks for listening and bye for now.

Advertisement: For over 100 years, Ally has helped dealers like you serve your customers by providing the best-in-class products and services you need. And by remaining true to the automotive passion we share. Your dedicated Ally account executive will work hand-in-hand with you to help you gain efficiencies, increase your product offerings and work to improve per-vehicle revenue because we care about your business as much as you do. We’re all better off with an ally. Contact your local Ally account executive to get started today. Ally do it right.