Beecher Carlson is the first Broker Breachmeister!

Eddie Slovik? We predicted it. It had to happen. And it looks like it has.

A major insurance broker based here in Atlanta, Beecher Carlson Holdings, had  two laptops stolen from employees attending an off-site company meeting in January. The laptops contained names and Social Security numbers for employees of Beecher Carlson’s clients, including 1,012 people who live in …..Massachusetts. Jackpot!!

Someone always has to be #1 and Beecher who is #29 on the 2009 BI Top 100 broker list may now be a true industry leader – in the abuse of client data!

In fact is a grand slam – a Massashusetts state law breach and likely a HIPAA/HITECH breach! Add in identity theft issues and you get Red Flag, GLBA as well. Any Nevadans in there? That would be a 5 bagger.

This is the type of power the Braves looked for all winter!! Little did we know we had it in town already.

Congratulations Beecher Carlson, CEO Tom Golub and your venture investors, this little mistake highlights the entire issue that HITECH and these other laws were created for in neon letters.

Frankly, in Beecher Carlson’s defense,  this  could happen to anyone reading this and I suspect that truth be told all the big boys have had these issues and we don’t know about it. I’d take odds on that in Vegas!

“Passion. Innovation. Accountability.” Nice corporate slogan, how does reality work here?

There are a variety of questions to examine here:

Beecher now has to deal with this issue and by the time this is resolved it will likely cost several million dollars, if not a lot more on lost clients.

As we have predicted their E&O policy won’t cover any of this. As an $82M revenue business – they just raised a new $12.9M from their deep pocketed VC’s. Interesting that this very small capital raise is announced within a few days of this breach becoming public and on the heels of their $92,000 commission settlement with the state of MA 3 weeks ago.

Is this being done to help pay for the extensive audit they just did in the MA commission case as well as anticipated costs of this breach? Studies show that simply to identify and notify people whose data was breached cost $225 per person. That means the MA folks alone could cost $350K. How many more were on that unencrypted laptop. That $150 to encrypt the laptop sure looks cheap now doesn’t it?

Having raised a bit of venture capital myself I am sure this “infusion” was quite costly to the insiders from a personal equity positon, as it should be.

“Accountability” – the management team‘s lack of attention here on commissions and now client data has likely cost them dearly.

It will be interesting to see if HHS finds “willful neglect” here.

Is it your turn next? What would you do if this happens to you? Where would your capital infusion come from? Let alone the ability to repair your reputation?

It would only have cost a few hundred dollars to encrypt the laptops. The final cost will be hundred of times that.

You need to do a full risk assessment and develop an action plan from it – whether you are in the BI Top 100 like Beecher Carlson – or Bob the local broker.

The lesson – Get compliant, stay compliant and encrypt your computers and data! We’ll show you how..

Explore posts in the same categories: brokers, Business, Employee Benefits, Healthcare, Healthcare Insurers, Healthcare Reform

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One Comment on “Beecher Carlson is the first Broker Breachmeister!”

  1. […] Industry Radar Insights Knowledge is Power. More Knowledge is the Ultimate Power. « Beecher Carlson is the first Broker Breachmeister! […]

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