Identity-theft insurance products gain in popularity
According to a study by Pleasanton, Calif.-based Javelin Strategy and Research, an independent financial-research group, 8.4 million Americans were the victims of identity theft in 2006.
The study added that adults under 25 and individuals who earn more than $150,000, annually, were among the most likely targets of identity thieves.
Insurance companies have taken notice of the fraudulent trend and are offering policies to protect consumers against identity theft.
Travelers Casualty and Surety Company - a member of the St. Paul Travelers Companies, Inc. (NYSE: STA) and the second largest underwriter of commercial property-casualty insurance in the United States - has partnered with the American Safety Council, Inc. (ASC), an Orlando, Fla.-based organization devoted to providing educational courses for court systems and state agencies.
The companies say they offer the first stand-alone identitytheft insurance policy that covers policyholders and their entire family living at home. A stand-alone policy is separate from homeowners’ insurance.
The policy was initially offered six months ago, says Joseph Lester, an identity-fraud product manager with Travelers Insurance in Orlando.
This stand-alone policy from both Travelers and the ASC is offered as additional coverage in conjunction with existing homeowners’ insurance.
“So far, the product is not doing too bad in New York,” he says. “Unfortunately, I don’t see the trend of identity theft stopping, so it will probably continue to do well.”
“We’ve seen some strong growth in the demand,” Lester adds. Both declined to provide specific revenues and policies sold.
The policy is already available in 15 states, including California and Illinois.
According to ID Analytics Inc., a San Diego, Calif.-based fraud-security firm, New York is one of three states with residents most at risk for attempted identity theft. Manhattan and Brooklyn residents are the most likely to be targeted.
According to Lester, the identity-theft coverage has three components. First, if the victim incurs out-of-pocket expenses, Travelers will reimburse that money up to $25,000 with no deductible. The outof-pocket expenses typically consist of lawyer’s fees and lost wages from time off work. Lost wages are covered up to $500 per week for a month.
Second, the identity-theft fraud directloss protection will reimburse the customer for lost bank funds up to $30,000.
Third, the policy covers any money or valuables within a safety-deposit box if it is lost or stolen, also up to $30,000.
The lowest premium for the policy starts at $49, annually.
“At Travelers, six identity-theft engineers put products together daily,” Lester explains. “Identity theft is on the minds of a lot of people.”
The identity-theft policy is the only type of insurance Travelers has available online, says Lester. Subsequently, Travelers has created a push-button policy that enables a consumer to buy the insurance online.
“After a person completes and pays for the policy, they can print the policy and it goes into effect immediately,” Lester says.
Travelers sells automobile insurance, homeowners’ insurance, and a number of other products, including boat insurance, valuable items insurance, wedding insurance, and the identitytheft protection program.
Travelers offers two identity-theft policies that are separate from the stand-alone ASC/Travelers policy. First, a company can purchase identity-fraud coverage for a group of employees, Second, an individual who has Travelers homeowners’ insurance can purchase an identity-theft fraud endorsement. This endorsement can be added to an existing Travelers homeowners’, condo, or renters’ policy at a cost of $25 annually.
Lester says that St. Paul Travelers Companies currently has around 4 million people insured for identity theft.
“We advise our customers to seriously consider the policy,” Czaplicki says. “I would say that out of 10 people, 40 percent decide to go ahead and purchase the product.” The Allstate policy is offered for $40 and can be added to an existing homeowners’- or automobile-insurance policy.
The identity-theft policy offers $25,000 worth of coverage.
“When you buy that coverage, you get restorative services,” Czaplicki explains. “Our agents will file the necessary paperwork, issue fraud alerts, and work with the credit agencies to correct and restore your credit.”