Philadelphia Insurance Companies Cyber Incident Exposed Sensitive Data

Philadelphia

The California Office of the Attorney General has been notified of a cyber incident involving Philadelphia Insurance Companies (PHLY) that occurred in June. As a result of the breach, unauthorized access was confirmed on July 9, leading to the compromise of sensitive personal information including names, dates of birth, and driver’s license numbers.

In response to the breach, Philadelphia Insurance is offering one year of identity monitoring services to all individuals affected. The company has also implemented enhanced security measures to safeguard against future incidents. This breach is part of a wider cyber event impacting multiple insurers, including Erie Insurance and First Insurance Company of Hawaii.

Erie Insurance announced on July 7 that it had resumed full operational capabilities after weeks of network outages caused by the cyber incident. A forensic investigation initiated by Erie revealed no evidence that sensitive personal data, financial records, or legally protected information were accessed during the breach.

Details on the Investigation

On July 1, First Insurance clarified that the issue did not involve ransomware, malware, or encrypted systems, and that an investigation is ongoing. Both Philadelphia Insurance and First Insurance Company of Hawaii are subsidiaries of Tokio Marine Holdings Inc.

Philadelphia Insurance Companies specializes in property and casualty insurance, particularly for niche markets, including nonprofits and educational sectors. The company operates about 50 offices nationwide, underwriting approximately $3.5 billion in gross written premiums.

Financial Overview

At the end of 2023, PHLY reported total assets of $12.19 billion, policyholders’ surplus of $3.82 billion, and a net income of $575.7 million. Their net premiums for that year amounted to about $3.52 billion, with a loss ratio of 62.8%, as outlined by Weiss Ratings. Philadelphia Insurance has also maintained an A++ (Superior) financial strength rating from AM Best since 2011.

In customer satisfaction rankings, PHLY positioned sixth in the 2024 J.D. Power U.S. Small Commercial Insurance Study, scoring 702—slightly above the industry average of 697.

Customer Advisory

Both Philadelphia Insurance and Erie Insurance are warning their customers about the potential for email and telephone scams that could exploit the cyber incidents. Erie Insurance filed a report with the U.S. Securities and Exchange Commission on June 7, detailing its own incident. They have reassured customers that they regained control of their systems and have seen no ongoing threats.

As part of the advisory measures, Philadelphia Insurance cautions its customers to be vigilant regarding unsolicited communications requesting personal information. Ongoing forensic investigations for both insurance companies aim to ascertain the full scope of the incidents, although the motive behind the cyberattacks remains undetermined.

Scope of Impact

Experts suggest that the volume of potentially affected individuals could be significant, possibly impacting millions due to the extensive customer base of both insurance companies and the sensitive data they handle. While the specific nature of the attacks remains unclear, analysts indicate that the incidents may relate more to data theft rather than ransomware attacks, as there is no evidence of data encryption being utilized.

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