As you likely already know, AI stands for Artificial Intelligence.  But did you know that AI is capable of generating someone else’s voice which actually sounds deceptively like that other person? This technology has gotten so good that the simulated voice is nearly indistinguishable from an authentic human voice as heard by the human ear.  Moreover, the technology has become relatively inexpensive and widely available so that ill-intentioned persons can access it from the internet.

While perhaps not all persons using AI have bad intentions, those who do now have the ability to impersonate someone else’s voice to perpetrate a scam, and the types of scams we are seeing are limited only by imagination, determination, and opportunity – both on personal and business fronts.  For example, recent news publications described an incident where a fraudster used AI technology to simulate a child’s voice, claiming that the child had been kidnapped and requesting a ransom payment; similarly, a fraudster swindled a couple out of a large sum by using AI technology to convince them that their son was asking them for bail money.  The possibilities are limitless, and the technology behind it is so new that the victims are typically unsuspecting and extraordinarily vulnerable.

WHAT MIGHT THIS MEAN FOR OUR INDUSTRY?

We all have distinctive voices.  How often does it happen that you already know who you are talking to simply by hearing their voice?  Let’s think about how DeepFake AI could affect the closing transaction being handled at your office.

DeepFake AI allows anyone to spoof a voice:  A seller calls with a change of disbursement, a broker calls telling you it is ok to pay the realtor at closing, the president of your company calls to tell you to release a wire or pay an invoice.  What would your team do if a realtor called to get additional information about their customer (sensitive information used to then defraud them)? A seller or buyer calls to gain information about the net proceeds from a sale, confirm financial information from lenders or employment details.   It might even be plausible that your office falls prey to a ghost fraud where the persona of a deceased person is used to convey property without having to go through probate.  Do you have a plan in place to verify any or all of the above?  How can you be sure it really is the person they say they are – especially if you speak with them frequently and it sounds like them?

Think about RON technology and how this new scam may affect digital closings. Speak to your RON vendors and verify what they are doing to keep their platforms secure.

Unfortunately, these are all questions and concerns that we now have to be aware of and try to plan for prior to getting caught by one of these DeepFakes.

HOW CAN YOU PROTECT YOURSELF?

As deep fake technology becomes more advanced, it is becoming increasingly difficult to distinguish between real and fake video calls. However, there are several signs that can help you recognize a deep fake video call and protect yourself.

1.       Pay attention to the quality of the video.  Deep fake videos often have subtle distortions or inconsistencies that can be difficult to detect but may be noticeable upon closer inspection. Look for things like unnatural or jerky movements, blurry edges around the skin and hair, shifts in lighting or skin tone, lips poorly synched with speech and strange blinking or no blinking at all. watch for is hair and teeth that do not look real, as algorithms may not be able to generate frizzy or flyaway hair or individual teeth. One simple way to detect a live deep fake is to ask the person on the video call to turn their profile to the camera. A person turning 90 degrees to the camera will create a distortion that will be detectable in real time.

2.       Pay attention to the audio. Deep fake videos often use synthetic voices or manipulated audio to create a more convincing illusion. Listen for any unusual or robotic-sounding speech patterns, or any discrepancies between the audio and the video.

3.       Watch for any inconsistencies or contradictions in the video that may indicate that it is being manipulated.

4.       Educate your yourself and your staff. Make sure you teach your employees about the various types and serious nature of cyber threats. Make cybersecurity training part of onboarding and provide continuous training.

In conclusion, recognizing a deep fake video call can be difficult, but by paying attention to the quality of the video, the audio and the context, you can protect yourself from bad actors who may be using deep fake technology to perpetuate fraudulent title insurance transactions.

Message from FLTA Cyber Security Committee

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Your Association Hard at Work!

In the Florida legislative process, we are concluding week 8 out of 9. As you can imagine it's been a very busy week with bills coming down to the wire and time expiring. Florida's Legislative Session is scheduled to conclude Friday, May 5^th. This is a status update on some of the legislation we are tracking.

SB 7052 / HB 7065 - Insurer Accountability

Revises requirements & conditions for certain insurer market conduct examinations after hurricane; specifies factors office may consider in determining whether continued operation of insurer may be deemed to be hazardous; prohibits officer or director of insolvent or impaired insurer from receiving bonus from such insurer; prohibits Citizens Property Insurance Corporation from determining that risk is ineligible for coverage solely on specified basis; revises prohibitions on insurers against cancellation or nonrenewal of residential property insurance policies; provides if roof deductible is applied under personal lines residential property insurance policy, no other deductible may be applied to other loss to property caused by same covered peril. Effective Date: July 1, 2023.

SB 7052 passed the Senate Floor and is sent to the House in Messages for the House's consideration. The bill was amended in week 7 to remove the language seeking to affect Title Insurance.

Link: SB 7052 First Engrossed version heading to the House

HB 7065 is awaiting to be scheduled on the Special Order Calendar for House consideration.

HB 743/SB 708 - Estoppel Certificates (Mortgage Estoppels)

Revises timeframe for mortgagee or mortgage servicer to send estoppel letter; revises requirements for estoppel letter; prohibits mortgagee or mortgage servicer from denying accuracy of estoppel letter; requires payments be applied to unpaid balance of mortgage; provides methods for sending written request for estoppel letter, estoppel letter, & corrected estoppel letter; requires mortgagee or mortgage servicer to take actions within specified time after unpaid balance of loan secured by mortgage has been fully paid; authorizes attorney fees & costs; provides liability.

HB 743 is awaiting placement on a House Special Order Calendar. (No Change)

SB 708 passed the State Senate by a vote of 40-0 and will now head to the House to be paired with HB 743. (No Change)  

HB 861/ SB 770 - Residential Loan Alternative Agreements

Specifies limitation on term of option to enter into listing agreement for disposition of residential real property; prohibits court from enforcing option to enter into listing agreement by certain means; requires notice & written agreement of residential property owner before broker may assign option to enter into listing agreement to another broker; provides penalties for violations.

SB 770 passed the State Senate by a vote of 40-0 and the House of Representatives by a vote of 116-0 and will now head to Governor DeSantis for his consideration.

Link: SB 770 as Enrolled 

HB 1419/SB 1436 - Property Fraud

Requires clerk of circuit court to create, maintain, & operate opt-in recording notification service through electronic registration portal; specifies portal & notification requirements; provides immunity from liability for clerk; clarifies that action may be brought to quiet title after fraudulent attempted conveyance; directs clerk to provide simplified complaint form; requires real estate licensees & parties providing real estate transaction closing services to send fraud prevention notice; limits liability of real estate licensee for noncompliance but provides that such noncompliance may be introduced as evidence for certain violations; provides that failure of property owner to respond notice does not preclude or limit his or her ability to establish certain challenges or defenses or limit his or her remedy in any quiet title or declaratory judgment action; prescribes form for quitclaim deed; revises requirements for recording instruments affecting real property.

HB 1419 was amended to remove real estate professionals and title agents from sending notices.

SB 1436 is awaiting placement on the Senate Special Order Calendar (No Change)

HB 487/SB 1158 - Department of Financial Services

Section 10 of this bill includes a glitch fix from legislation in 2022.

Department of Financial Services: Revises eligibility for plans of deferred compensation established by CFO; authorizes judge of compensation claims to order injured employee's evaluation by expert medical advisor; revises conditions for nonprofit religious organization to be exempt from requirements of insurance code; adds limited license for transacting preneed funeral agreement insurance; revises licensure requirements for reinsurance intermediary brokers & reinsurance intermediary managers; authorizes certain persons to obtain limited license to sell only policies of life insurance covering expense of prearrangement for funeral services or merchandise; revises requirements, conditions, & procedures for bail bond agency license. Effective date: Upon Becoming a Law. 

HB 487 was sent to the Senate where it was taken up, amended, and passed 37-0. HB 487 will now be returned to the House for their consideration as amended or decline to receive as amended and return to the Senate. 

Link: HB 487 Engrossed 1 version being sent back to House

SB 1158 laid on the table. Now referring to HB 487.

HB 49/SB 430 - Abandoned Cemeteries

Abandoned and Historic Cemeteries: Creates Historic Cemeteries Program within Division of Historical Resources of DOS; creates Historic Cemeteries Program Advisory Council; authorizes certain entities to acquire conservation easements to preserve cemeteries.

HB 49 - Passed the House Floor by unanimous vote and delivered to the Senate to be paired with SB 430. (No Change)

SB 430 - Passed Appropriations Committee during week 8 and awaits 2nd reading to then be placed on Special Order Calendar.

Return to Industry News.

Your Association Hard at Work!

In the Florida legislative process, we are concluding week 7 out of 9. Earlier this month we shared with you an update on legislative activity in Tallahassee that could change Florida's title insurance rate filing procedures from promulgated to file and use. This is a status update to this legislation and other legislative bills... 

SB 7052 / COM4 (Now HB 7065) - Insurer Accountability

Senate Bill 7052 has passed its committee stops and is awaiting consideration on the Senate Floor. Through the legislative process, the bill has been amended to remove the language seeking to change Florida's promulgated rate structure to a file and use. 

House Bill 7065 (formerly COM4) continues its legislative progress and continues to not include language affecting title insurance.

This is the result of FLTA members, industry lobbyists, and other member organizations working together. For now, it seems Florida's Title Insurance filing system will remain as is, but we will continue to monitor the legislation until sine die (session adjournment) for any unexpected changes.

HB 743/SB 708 - Estoppel Certificates

Revises timeframe for mortgagee or mortgage servicer to send estoppel letter; revises requirements for estoppel letter; prohibits mortgagee or mortgage servicer from denying accuracy of estoppel letter; requires payments be applied to unpaid balance of mortgage; provides methods for sending written request for estoppel letter, estoppel letter, & corrected estoppel letter; requires mortgagee or mortgage servicer to take actions within specified time after unpaid balance of loan secured by mortgage has been fully paid; authorizes attorney fees & costs; provides liability.

HB 743 is awaiting placement on a House Special Order Calendar. 

SB 708 passed the State Senate by a vote of 40-0 and will now head to the House to be paired with HB 743.  

HB 861/ SB 770 - Residential Loan Alternative Agreements

Specifies limitation on term of option to enter into listing agreement for disposition of residential real property; prohibits court from enforcing option to enter into listing agreement by certain means; requires notice & written agreement of residential property owner before broker may assign option to enter into listing agreement to another broker; provides penalties for violations.

SB 770 passed the State Senate by a vote of 40-0 and the House of Representatives by a vote of 116-0 and will now head to Governor DeSantis for his consideration. 

HB 1419/SB 1436 - Property Fraud

Requires clerk of circuit court to create, maintain, & operate opt-in recording notification service through electronic registration portal; specifies portal & notification requirements; provides immunity from liability for clerk; clarifies that action may be brought to quiet title after fraudulent attempted conveyance; directs clerk to provide simplified complaint form; requires real estate licensees & parties providing real estate transaction closing services to send fraud prevention notice; limits liability of real estate licensee for noncompliance but provides that such noncompliance may be introduced as evidence for certain violations; provides that failure of property owner to respond notice does not preclude or limit his or her ability to establish certain challenges or defenses or limit his or her remedy in any quiet title or declaratory judgment action; prescribes form for quitclaim deed; revises requirements for recording instruments affecting real property.

HB 1419 was amended to remove real estate professionals and title agents from sending notices, and passed the House Judiciary Committee by unanimous vote and is scheduled for consideration on the House Special Order Calendar during Week 8.

SB 1436 passed the Senate Rules Committee by unanimous vote and having passed all committees of reference, is prepared for consideration on the Senate floor. 

HB 487/SB 1158 - Department of Financial Services

Section 10 of this bill includes a glitch fix from legislation in 2022.

Department of Financial Services: Revises eligibility for plans of deferred compensation established by CFO; authorizes judge of compensation claims to order injured employee's evaluation by expert medical advisor; revises conditions for nonprofit religious organization to be exempt from requirements of insurance code; adds limited license for transacting preneed funeral agreement insurance; revises licensure requirements for reinsurance intermediary brokers & reinsurance intermediary managers; authorizes certain persons to obtain limited license to sell only policies of life insurance covering expense of prearrangement for funeral services or merchandise; revises requirements, conditions, & procedures for bail bond agency license.

HB 487 passed the House Commerce Committee by unanimous vote and has been placed on the Special Order Calendar for Week 8.  

SB 1158 passed the Senate Fiscal Policy Committee by unanimous vote and having passed all committees of reference will be placed on the Senate 2^nd Reading Calendar.

HB 49/SB 430 - Abandoned Cemeteries

Abandoned and Historic Cemeteries: Creates Historic Cemeteries Program within Division of Historical Resources of DOS; creates Historic Cemeteries Program Advisory Council; authorizes certain entities to acquire conservation easements to preserve cemeteries.

HB 49 - Passed the House Floor by unanimous vote and delivered to the Senate to be paired with SB 430.

SB 430 - Awaiting consideration by Appropriations Committee during week 8.

Your Association Hard at Work!

Washington, D.C., April 21, 2023 – The American Land Title Association (ALTA), the national trade association of the land title insurance industry, alongside AARP, the Florida Land Title Association and AARP Florida applaud the Florida legislature for passing Senate Bill 770, which will protect homeowners from the predatory practice of filing of unfair real estate fee agreements in property records, known as Non-Title Record Agreements for Personal Service (NTRAPS).   

Florida follows a model bill, which ALTA helped draft with input from national stakeholders. The model bill created a blueprint for states wishing to provide a remedy for existing NTRAPS while also discouraging future unfair and deceptive practices.  

“The property rights of American homebuyers must be protected,” said ALTA Vice President of Government Affairs Elizabeth Blosser. “A home often is a consumer’s largest investment, and the best way to support the certainty of landownership is through public policy. We have to ensure there are no unreasonable restraints on a homebuyer’s future ability to sell or refinance their property due to unwarranted transactional costs.” 

“This follows our advocacy efforts we have undertaken in collaboration with ALTA in other states, and we are expecting and hoping to work on similar legislative solutions in other states in helping homeowners against such predatory housing practices,” said AARP Government Affairs Director Samar Jha. 

NTRAPS have been recorded in property records since 2018. The practice preys upon homeowners, offering small cash gifts in exchange for decades-long contracts for the exclusive rights to sell the property.

Submitting NTRAPS for inclusion in property records characterized as liens, covenants, encumbrances, or security interests in exchange for money creates impediments and increases the cost and complexity of transferring or financing real estate in the future. 

“The Florida Land Title Association supports SB 770 because it helps protect the Florida real estate market from business practices which unnecessarily and possibly deceptively encumber people’s homes,” said FLTA President Mickey Godat. “The bill provides a clear framework for legitimate business practices to continue but not in a manner that adversely affects a home’s marketability.” 

“We applaud the governor, attorney general and the Florida legislature for taking this essential step in helping Florida curb this predatory housing practice,” said Zayne Smith, Director of Advocacy for AARP Florida. “Our homes are often the most important investment we will make, and this legislation is an important safeguard to better ensure our investment is protected.” 

The new law will:

• Make NTRAPS unenforceable by law. 
• Restrict and prohibit the recording of NTRAPS in property records. 
• Create penalties if NTRAPS are recorded in property records. 

 SB 770 will head to the desk of Florida Gov. Ron DeSantis and once signed will go into effect on July 1, 2023.  

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BEC:  Business email compromise (BEC) is a form of phishing where a criminal attempts to get a worker, customer or vendor to send money or disclose private information by sending a phony email that appears to be coming from a trusted company figure.

Botnet:  (Robot Network):   A group of 2 or more computers controlled and updated remotely, often by a single user to send out spam messages, often including malware.  Most often they are associated with a “denial of service”. This is a newer crime just added to IC3 Reporting in 2022.

Clickjacking:  When a website has been compromised by concealing hyperlinks beneath legitimate clickable content that contains content or malware the user is unaware of.   A user believes they are clicking on one thing but in actuality, they are clicking on another hidden element.

Deepfake: A false simulation of a specific individual’s likeness, which can be either an image, video, or audio presentation, generated with the use of technology and capable of being used for a variety of purposes, including ones derived from malicious intentions.

Malware: A broad term used to describe any type of malicious, invasive software.

Pharming:A type of cyberattack involving the redirection of web traffic from a legitimate site to a fake site for the purpose of stealing usernames, passwords, financial data, and other personal information.

Phishing:  The practice of sending emails or other messages purporting to be from reputable companies or people in order to induce individuals to reveal personal information, such as login credentials and other sensitive information.

Quishing:  Also known as QR code phishing, this type of phishing attack uses QR codes to lure victims into revealing sensitive information. Threat actors create a QR code that looks legitimate, such as one that appears to offer a discount or special offer, but in fact, it directs the victim to a fake website controlled by the attacker.

Ransomware: Malicious programs which block access to a computer or the computer’s data with the intent of extorting money in exchange for a release of the computer or its data.

Sandboxing:  Using a safe environment to run, observe or analyze code.  Often used in an isolated environment the mimics the end-user experience.  It is used to test suspicious programs that may contain viruses or other malware without allowing the software to harm a network.

Scareware: Malware that is typically used to scare users into taking an action with their electronics which tricks the user into opening a vulnerability; for example, scareware can take the form of a pop-up that falsely warns a user that (s)he has been infected with a virus so that when the user clicks the “X” to close the box, (s)he actually first incurs the infection of the virus that (s)he had been afraid of contracting.

SIM Swap:  Using SIM technology to transfer a victim’s phone service to a mobile device in a criminal’s possession.  This is a newer crime just added to the IC3 Reporting in 2022.

Smishing:  This type of phishing uses mobile phones as the attack platform. With smishing, the attacker uses a compelling text message to trick targeted recipients into clicking a link and sending the attacker private information or downloading malicious programs to a smartphone.

Sniffing:  The process of monitoring and capturing all data passing through a network.  It is in essence the unauthorized listening in on network traffic to capture all the data flowing to and from a computer or network.

Social Engineering: A broad term used to describe different types of efforts using human psychology to exploit a person’s vulnerability, rather than employing technology alone, in order to hack into another’s computer, software or data.

Spear Phishing:  This is a more advanced form of phishing. This type of phishing is a specific and targeted attack on a specific person or group and often will include information known to be of interest to the target, such as current events or financial documents.

Spoofing:An act of disguising a communication from an unknown source as being from a known, trusted source by email, phone calls, websites or computer spoofing an IP address.

Stealthing: Approaches used by malicious code to conceal its presence on an infected system.

Vishing:  Also known as voice phishing, this type of phishing attack is conducted entirely over the phone. The attacker will call a victim and manipulate them into divulging sensitive information such as login credentials, pin numbers or credit card numbers, typically with the goal of accessing financial accounts.

Whaling: A highly targeted phishing attack - aimed at senior executives - masquerading as a legitimate email. Whaling is digitally enabled fraud through social engineering, designed to encourage victims to perform a secondary action, such as initiating a wire transfer of funds.

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It’s That Time of Year

While my favorite season of the year is Fall, I do enjoy Springtime in Tallahassee.  The weather is beautiful, flowers are starting to bloom, and the warmer weather and longer days allow our family more time to get outside.  While spring in Tallahassee is beautiful, it also brings along an unwanted friend, pollen.  You can often see the first hints of it if you drive a dark colored car.  No, that isn’t yellow dirt covering your vehicle you just washed.  This is followed by your allergy prone friends beginning their annual trek to the local drugstore for the best OTC to halt the attack on their sinus’.

While pollen is one way to indicate Spring’s arrival, I prefer to gauge it by the blooming of the southern azaleas.  Typically, I think of the timing being between late march and early April in time for the Masters being played at Augusta National Golf Club.  Unfortunately, spring is in full swing right now.  The azaleas are in full bloom, the new spring growth is everywhere along with the dreaded pollen season.  Yes, it’s that time of year.

It’s also time for the start of the 2023 Legislative Session.  This year Regular Session is scheduled to begin on March 7 and conclude on May 5, 2023.  Members bills are being filed daily with the pace increasing as bill filing deadline draws near.  It is always difficult to pass a bill and given that two interim committee weeks were also used as special sessions for Governor DeSantis’ priorities, the Legislature has not acted on many bills with many others apparently stuck in bill drafting.  I would expect that many special interest priorities will be left to accomplish at a later date.

Unfortunately, there are a lot of issues impacting the title industry that need attention.  The list includes a much-needed glitch fix in the DFS package impacting title agencies, prohibiting qualified mortgage payoff letters, addressing long term right to sell contracts and the exploding identity theft in real estate closings.  This is just the short list for the title industry and doesn’t even include issues that may be filed by a legislator requiring the title insurance lobby teams to engage on.  There is a lot of work to be done in 2023.

This is also the time of year to make your travel arrangements to attend the Florida Land Title Association’s Legislative Lobby Days in Tallahassee scheduled for April 3-5th, 2023.  This important event provides you the opportunity to advocate for the industry, connect with legislators and network with peers from across the state and to become educated on the latest from the front lines. 

As you know, the business of passing laws is much more than simply being on the right side of an argument.  Passing laws is selling and the business of selling is always rooted in relationships.  If you have never attended the FLTA event, there is no better time to dip your toe in then when there are a lot of title industry issues we need to explain to legislators.  Who better to explain than those who work in the industry and see them firsthand.  If you are a veteran, your skill and experience are needed as we work to educate both new legislators and sharpen the skills of the next group of title insurance industry leaders.     If you need additional information on Legislative Lobby Days visit www.flta.org or call Scott Merritt. 

So, it’s that time of year, but what are you waiting for?  There are plenty of issues needing attention in Tallahassee.  There is a whole crop of new legislators that need to know who to call from their community when a title industry issue arises in Tallahassee.  Don’t miss a golden opportunity.  After all, the freshman legislator you meet this year may be the Speaker of the House or Senate President in 2028.

Message from Agents' Section Lobbyist, David Daniel, with Smith, Bryan & Myers

TALLAHASSEE, Fla. — Today, Governor Ron DeSantis nominated Michael Yaworksy as Commissioner of the Office of Insurance Regulation (OIR). Yaworksky is currently Vice Chair of the Florida Gaming Control Commission and previously served as Chief of Staff of OIR.

Yaworsky will serve as Interim Commissioner until his nomination is brought before the Financial Services Commission for final approval.

Michael Yaworsky

Yaworsky, of Tallahassee, is currently Vice Chairman of the Florida Gaming Control Commission. Previously, he was Chief of Staff at the Florida Office of Insurance Regulation, Legal Counsel to the Georgia Insurance and Safety Fire Commissioner, Counsel to the Georgia Senate President Pro Tempore and Chief of Staff at the Florida Department of Business and Professional Regulation. Yaworsky earned his bachelor’s degree in social science from Florida State University and juris doctor from Samford University. 

Press Release from The Office of Florida Governor Ron DeSantis

Skate to the Puck, by David Daniel, Agents Section Lobbyist, Smith Bryan & Myers

Ok, here is the truth, I use to be an avid Detroit Red Wings hockey fan watching the NHL playoffs each year to see them compete.  Big cross-checks on the boards by the defensive, visually blocking the opposing goalie for a redirected shot on goal and the sheer desire by players to hold the Stanley Cup were all a part of the draw for me.  “The Great One”, Canadian Wayne Gretzky, who has more assists in his career than the next leading goal scorer, is considered by many to be the most accomplished and well-known hockey player.  In discussing his early hockey training, one of his father’s instructions was to skate “To where the puck is going, not where it’s been.”  So simple and highly effective for his amazing hockey career.

While I don’t watch much NHL anymore and the players I enjoyed have come and gone, I have come back to the phrase, “skate to the puck” many times.  Its application is greater than simply a training tool in hockey and applying this principle to politics has been helpful.  Think about it, if you know the direction of a special interest group or politician you can use that to your advantage in getting your agenda across the line or defeating a bad bill.  So how do you know where “the puck” is going in politics?  It is based on information gained by investing in relationships.  Knowing how best to approach a state legislator is information and information is power and can provide much needed intelligence to make navigating the legislative process easier.

As a veteran of prior legislation seeking to reform Florida’s broken HOA estoppel process, I know first-hand how challenging this issue can be.  In addition, this battle is over money with the current process simply authorizing an exit tax on Florida’s homeowners to excessively enrich the HOA.  We all know just having the right public policy does not guarantee success during a legislative session.  It is hard to pass a bill through the legislative process and the right policy must often be worked around the politics of session, individual legislators, and the committee process.

Fortunately, we have a unique opportunity during the 2023 and 2024 Legislative Sessions.  The incoming Senate President, Sen. Kathleen Passidomo (R-Naples) is both a Florida Bar certified real estate lawyer and member of the Real Property Probate and Trust Law Section of the Florida Bar.  She gets it and understands our industry and the challenges we face each day to serve Floridians by accurately and timely completing real estate transactions.  She has made it clear to all she believes both the lender estoppel and HOA estoppel issues need change.

So, how do we skate to the puck?  We know tough legislative battles lie ahead.  We know the incoming Senate President is interested in making this process work more efficiently and be less costly for Florida homeowners.  We know the opposition will hire up lobbyists to oppose any change to their lucrative exit tax.  We know that during the last HOA estoppel battles our biggest advantage were the examples provided across the state of outrageous fees and charges homeowners had to pay to simply get an estoppel letter.  We know where the puck is going, as do our opponents.  The question is what we are willing to do to this summer to get there first.

How about supporting pro-title industry candidates’ election and re-election?  How about using this election season to develop relationships with state legislators from your area of the state?  How about starting now to collect examples of the significant fees and charges required by HOAs as an exit tax from their association?  We know what is coming and we know we need to be prepared prior to the annual Legislative Session which begins on March 7, 2023.  Will you be in position when the puck gets there?

NO, An E&O/Professional Liability policy only covers loss due to damages resulting from the failure to provide professional services, negligence, preventable mistakes, incompetent work, and other professional errors.  If a Title agent suffers a cyber-attack with only E&O in place, they will not have coverage for a significant portion of their actual expenses.

Errors & Omissions covers only the legal costs associated with a lawsuit, including attorney’s fees, court judgments, and, in some cases, settlements. This is considered third-party coverage, i.e., costs brought on by the action of third parties;  clients, vendors, and government agencies. 

This is why nearly every Title agent needs both E&O and Cyber Security Insurance coverages to prevent financial ruin after a cyber-attack.

Cyber Liability policies can also include other kinds of coverage:

• 1.        Media liability, which covers costs stemming from violations of intellectual property, trademarks, and copyrights, as well as slander and libel.
• 2.        Privacy is another common area for cyber liability coverage, though it covers offline data loss, too. In these cases, privacy insurance can cover costs associated with missing physical files, lost laptops, or even sending private information to the wrong e-mail address.
• 3.       Social Engineering Fraud can be covered under two different areas a Crime Policy and/or Cyber Liability Policy.

Cyber Policy vs. Crime Policy

It may seem counterintuitive, but social engineering fraud is not always covered by a crime-policy. Even though this fraud often involves emails and wire transfers, all cyber policies are not designed to cover them either.  As cyber criminals and their tactics become more complex, the majority of cyber and cyber-crime attacks are executed via social engineering.

Crime policies cover the direct loss of your funds, whether through maleficence, employee dishonesty or social engineering. 

Cyber policies cover economic damages arising through a failure of network security or privacy controls which may cause indirect losses.  They cover losses that result from unauthorized data breaches or system failures.

Areas of Risk To Be Aware Of

• 1.        Computer fraud:  This is a loss stemming from the unlawful theft of money due to a “computer violation” or in easier terms – it is the unauthorized entry into or deletion of data from a computer system by a third party. This could include engaging in data mining via spyware and malware or sending computer viruses with the intent to destroy or ruin another party’s computer or system.
• 2.       Funds transfer fraud:  This is a loss that caused by fraudulent instructions to transfer funds made without the insured’s knowledge or consent. This can happen by fraudsters gaining login credentials in order to access protected accounts. 

Tips when shopping for Cyber insurance:

• 1.        Cyber policies are not all the same.  It is important to speak with a broker that knows the Title industry.
• 2.        It is not a good idea to base your decision on price.  Keep in mind, most of the time, the cheaper the coverage, you most likely have less coverage than you may think.
• 3.       Check the policy coverages limits – know what covered and know what is not covered
• 4.       Read the exclusions page:  This spells out what is NOT covered. 

Key Words to Know When Choosing the Correct Coverage:

Network Security: Insurance against cyber-attacks and hacking attacks.

Theft and fraud: Cover destruction or loss of the policyholder’s data as the result of a criminal or fraudulent cyber event, including theft and transfer of funds.

Forensic investigation: Covers the legal, technical, or forensic services necessary to assess whether a cyber-attack has occurred, to assess the impact of the attack, and to stop an attack.

Business interruption: Covers lost income and related costs where a policyholder is unable to conduct business due to a cyber-event or data loss.

Social Engineering: is the non-technical cyber strategy that relies on tricking people into breaking standard security practices by manipulating victims into performing various actions or providing confidential information. Social engineering fraud (SEF) is a type of fraud that’s become increasingly common over the last several years, with a large majority of this fraud transpiring over email communications.

Cyber extortion and ransomware: Provides coverage for the costs associated with the investigation of threats to commit cyber-attacks against the policyholder’s systems and for payments to extortionists who threaten to obtain and disclose sensitive information.

Reputation Insurance: Insurance against reputation attacks and cyber defamation.

Computer data loss and restoration. Covers physical damage to, or loss of use of, computer-related assets, including the costs of retrieving and restoring data, hardware, software, or other information destroyed or damaged as the result of a cyber-attack.

Information Privacy. Covers organizational liabilities arising from actual or alleged non-compliance with any worldwide cyber, information privacy, or identity-related regulation, statute, or the law. For example, this coverage part would cover an organization's legal defense, and ultimate monetary settlement, resulting from a regulatory claim alleging such organization was non-compliant with any covered privacy regulation

Bricking- Bricking refers to a consumer electronic device that has been damaged beyond repair, making it utterly unusable, often because of damaged firmware, malicious or incorrect software. once they are rendered inoperative, they are virtually useless except as a paperweight or a doorstop

Insurance and recovery process: Coverage for business interruption loss under cyber insurance policies is becoming more prescriptive, the language in most insurance policies is still somewhat open ended and subject to competing interpretations.   Most business interruption coverage includes a waiting period of a certain number of hours and a requirement that net profit or loss, charges and expenses be calculated on an hourly basis. It’s important to recognize that cyber insurance policies provide for the recovery of lost net profits and mitigation costs, as well as continuing expenses, such as employee salaries.

The above is provided as informational only from the Cyber Security Committee. It should not and does not represent insurance advice or legal advice. Be sure to consult with your insurance and/or legal team for additional information.

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