ID Theft Insurance as a Voluntary Benefit

The insurance is a small cost to enhance employee financial security and hedge against lost productivity.

Among the voluntary benefits that employers offer, identification theft insurance is becoming more popular.

The reason, says Daniel Struck, a partner with Culhane Meadows in Chicago, is that one in 25 people experience an incident of cyber theft or identification theft. “It is a widespread issue,” Struck says. “Without insurance, it takes a person 30 to 50 hours of their time to deal with the impact, that is, making phone calls and cancelling accounts. That is typically done during working hours, so employers realize this is a productivity issue.”

And, this insurance typically costs $3 to $5 a person per month, Struck says. LegalShield’s ID Shield costs $6.95 per person a month and $12.95 for family coverage, notes Emily Rose, senior vice president of sales for the company’s business solutions division. Rates are based on group size.

Rose agrees that employers are increasingly interested in offering identification theft insurance to their workers, with some employers covering the cost. “As more and more breaches appear in the news, they are getting employers’ attention, prompting more to offer this type of insurance as part of their overall financial wellness,” Rose says.

As to what ID Shield offers, it centers around “privacy and reputation management,” Rose says. “We start by monitoring personal and financial information and by conducting credit monitoring. We then cover the gamut, including the dark web and social media. We monitor all of that to insure people’s information is secure. Should a breach occur, our restoration services team steps in.”

ID Shield is also very sensitive to breaches to a person’s 401(k) or other savings account, Rose says. Starting in 2020, LegalShield will ask people for a threshold amount that they would likely use to withdraw money from their various accounts, and should a transaction occur above that sum, ID Shield will immediately notify the account holder to verify that they were the person directing that withdrawal, Rose says.

“Once a person finds a discrepancy in their account, they can contact our center,” Rose says. “The first thing we will do is shut that account down, and then help the person change their password and user name to secure all of their accounts. We will then send them paperwork to provide us with limited power of attorney so that our private investigation team can communicate with all of their financial institutions to secure all of their accounts.”

The team tries to have the financial institutions make any breached accounts whole, but should that fail, ID Shield also has an insurance policy that will cover up to $1 million of lost funds, Rose says.

But even if a person reports one problem, LegalShield is very proactive about examining all of his accounts by examining activity through all three credit bureaus, Rose says.

She says all types of workers and all types of companies are expressing interest in this type of insurance, and that when offered, it is very popular among workers. In fact, 70% of ID Shield’s group plan participants are enrolled in the identify theft family plan, she says. Furthermore, a survey that LegalShield conducted found that 50% of employees think employers should offer identify theft protection in their benefits package, and 89% of employees say that owning identity theft insurance provides them peace of mind.

As to what an employer should look for when selecting identification theft insurance, it is important to determine if they will reimburse people for out-of-pocket expenses incurred when dealing with a breach, as well as whether they are willing to reimburse people for stolen monies, Struck says.

“Find out what the scope of the coverage is,” he suggests. “Price, of course, is a factor to consider as well, and it is also important to get a sense of the insurer’s reputation and quality. This is a growing market and very much like the Wild West in its early days. There are insurers of very different qualities in this market. It is important for employers to take the time to make sure they are buying from an insurer that will be dependable in doing what it promises to do.”