Demand for upgrades of dealership systems to meet insurers’ requirements has created a backlog of requests from existing and prospective customers for security consultants who work with dealerships.
“We’re backlogged well into ’22,” Proton Technologies CEO Brad Holton said. His company received three calls in one week after Proton’s name was mentioned by a dealer during a peer group discussion about ransomware, he said.
A retailer with 35 to 40 stores hired Proton in August because it was unable to obtain cyber insurance, Holton said. Proton worked with the insurance provider to demonstrate that additional protocols would be in place within weeks and months while noting that the group needed coverage sooner.
“Even then, it was an elevated premium,” Holton said. “It’s just totally different. Two years ago, it was no problem for anyone to get cyber insurance.”
Providers’ additional requirements dovetail with new regulations coming from the Federal Trade Commission, which in October updated the Safeguards Rule outlining how dealerships and other financial institutions must protect consumer data.
Erik Nachbahr, president of Helion Technologies, said investing in stronger security measures is no longer optional, not just because the threat of cyberattack is real but because regulators and insurers are taking notice.
“It’s tens of billions of dollars in claims just in ransomware, and the multifactor authentication is so effective at stopping that stuff, it’s no surprise they’re insisting on it now,” said Nachbahr, adding that his company also has a backlog of requests for service.
Chapman Auto Group, an eight-store group in Horsham, Pa., has been going through the cyber insurance renewal process during the last couple of months, CFO Anthony Tigano said.
Chapman has adopted multifactor authentication and mandatory employee phishing training, and it restricts Internet Protocol addresses from outside of the U.S. from accessing its network, Tigano said. Yet even with those steps, he said, the group’s premium for the same $5 million coverage limit likely will increase from about $20,000 per year to about $53,000.