This article was produced with Tokio Marine HCC - Cyber and Professional Lines Group (CPLG), a member of the Tokio Marine HCC group of companies based in Houston, Texas.
Gia Snape of Insurance Business sat down with Kareen Boyadjian (pictured), vice president of personal and healthcare cyber underwriting, to discuss emerging cyber risks for high-net-worth individuals and families, including social engineering, wire transfer, and artificial intelligence-driven threats, and how the cyber insurance market can evolve to address gaps in coverage.
Personal cyber coverage has been offered as an add-on to a homeowner's policy. However, as cyber threats have grown more sophisticated and losses have increased, these policies may not offer enough coverage to address the evolving cyber environment.
The landscape of cyber threats has shifted dramatically in recent years, and high-net-worth (HNW) individuals have become prime targets. HNW individuals and families face unique risks that demand more robust, adaptable coverage.
"Cyber is no longer just a throw-in coverage; it is a real exposure that must be properly addressed with comprehensive coverage tailored to the risks individuals face,” Boyadjian said.
“The standard language, which primarily focused on identity theft and minimal cyber extortion coverage is no longer sufficient.”
According to Boyadjian, the top cyber threats for HNW clients are social engineering or cybercrime, cryptocurrency theft, and wire transfer fraud. While these attacks aren’t new, they are evolving in sophistication, making them harder to detect and even more difficult to combat.
Cybercriminals have become methodical, targeting individuals with precision, often leveraging stolen data to craft elaborate fraud schemes. The exposure has shifted from simple identity theft to a more sinister form of organized crime, where stolen information is a commodity traded on the dark web.
As companies invested heavily in cybersecurity training and employees became better at spotting phishing emails, hackers adjusted. "That’s where they started spending a little bit more effort on personalized scams, impersonation scams, and leveraging technology to give them the best bang for their buck," said Boyadjian.
Artificial intelligence (AI) has supercharged these efforts. Generative AI can now mimic voices with unsettling accuracy, creating fraudulent phone calls from someone’s spouse, financial advisor, or child. According to the FTC, consumers reported losing more than $12.5 billion to fraud in 2024, representing a 25% increase over the prior year. Imposter scams accounted for the second-highest reported loss amount, with $2.95 billion reported lost.
Banks, which once played a role in fraud prevention, have shifted responsibility onto their clients. If a hacker uses AI to impersonate someone’s spouse and convinces a bank to transfer $200,000, the institution won’t take the fall.
"The bank will claim, ‘We’re just doing what we’re told,’” Boyadjian said. “There’s a huge gap in the marketplace, and insureds could be left losing money.”
Wire transfer fraud is another silent killer. The sums stolen can be immense, but the theft itself often goes unnoticed for months.
Cybercriminals also tend to target individuals with multiple financial accounts, investments, and third parties managing their money. They monitor inbox activity, identifying frequently emailed contacts such as attorneys or money managers, then impersonate the victim.
“Every step of the process looks entirely legitimate, making these scams particularly effective,” said Boyadjian. “The key difference between high-net-worth individuals and the average person isn’t the act of wiring money, it’s the significantly larger sums involved, making them more attractive targets.”
One of the biggest gaps in cyber coverage for HNW clients is voluntary wire transfer fraud. These cyber insurance policies often exclude coverage because the insured party intentionally authorizes the transaction, even if they were deceived. Insurers classify these cases as voluntary acts rather than theft, which allows them to deny claims under traditional policy language. Banks follow the same logic, washing their hands of responsibility once a transfer is made.
The second crucial element, according to Boyadjian, is ensuring coverage extends to money managers. “If a money manager or risk manager wires money on behalf of a client, whether the client’s assets are managed by a family office or another firm, there should be vicarious liability coverage for that transaction,” she said. “This is an important component to look for in a policy.”
The unique risks and regulatory uncertainties associated with digital assets have also led to a HNW cyber coverage gap for cryptocurrency theft. “The current administration supports cryptocurrency, and we’ve seen more uptake in interest due to the cryptocurrency theft component of our policy.
CPLG has recognized these gaps and brought a solution to the marketplace to cover the evolving digital landscape. The standalone, comprehensive cyber form comes with a 24/7 claims service and an option to utilize the prevention and protection services of IDX, a Zerofox company for no additional premium.
The form is designed not only to cover today’s primary cyber risks but also to adapt to emerging threats, including voluntary wire transfers, impersonation scams, and telephonic fraud, an area that has surged with AI-generated voice manipulation.
The world of cyber threats has changed, but insurance has been slow to evolve. CPLG’s approach aims to address the full spectrum of modern cyber risks. The goal is to offer flexibility, adaptability, and protection against the threats that truly matter today.
"While endorsements on homeowners’ policies have historically addressed some cyber risks, they may not be sufficient for high-net-worth individuals said Boyadjian. “That’s why our standalone form is so popular. It stands on its own as a robust and flexible solution for the challenges of the current cyber environment.”
As cyber threats evolve, so must cyber insurance. HNW individuals and families must ensure their policies are tailored to their specific risk profiles, with flexible, up-to-date coverage that extends beyond outdated identity theft protection.
Investing in a dedicated cyber policy is not just an option; it is a necessity for securing digital assets and personal wealth in an increasingly connected world.
Learn more about Tokio Marine HCC – CPLG’s cyber insurance policy here.
