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THE CYBER BUSINESS WORLD – NAVIGATE IT WITH PROPER CYBER INSURANCE COVERAGE

This is an actual cyber risk story of an unfortunate and fortunate storage company – unfortunate in that they suffered a loss and fortunate, as they had the right insurance cover, through the right broker. The name of the client is fictional, to protect their identity.

The Storage Solution Company needed to urgently purchase additional storage containers due to the expansion of their business.  Because of difficulties experienced with their normal suppliers due to COVID-19, the client did some research and found a supplier via a website advertising containers at a competitive price, with a quick delivery time. The website was professionally done and appeared legitimate. 

An invoice was sent through for payment and paid by the client via EFT. There was constant communication between the supplier and the client was even provided with the contact details of the driver who was supposed to deliver the container. Delivery was seemingly delayed due to bad weather conditions which meant that the cranes could not be operated. The client did not query the delay as there had been very high winds and bad weather conditions being experienced throughout the country.  

The client tried to contact the supplier to confirm a delivery date, but was unsuccessful. After investigating, it was discovered that the company was fraudulent and did not exist. The client submitted a claim via their broker and was reimbursed for the loss – a happy ending, which could have been financially debilitating for the client, had they not been insured.

Cyber insurance is no longer a nice to have, it is a necessity, in that virtually every business sends, stores, receives or uses electronic data daily. 

Standard coverable cyber risks are essentially:

  1. Loss to your Business due a cyber breach. For example Business Interruption loss, Data Restoration Costs, Cyber Extortion (ransom demand payments);
  2. Liability to Third Parties, including as a result of Multimedia and Regulatory;
  3. Emergency Response Costs.

Not all cyber insurance policies are created equal though. This class of insurance is still in its infancy and is continuously developing, for example, AIB Cape has recently gained access to new cutting edge cyber offering, covering the above standard cyber risks, including loss of funds from business bank accounts due to a fraudulent transfer of funds. In the past, one had to purchase a combination of cyber products in order to have comprehensive cyber cover – this thankfully is now a thing of the past (as fraudulent loss of funds from bank accounts can now be included).

On the topic of loss of funds from bank accounts, people incorrectly believe that the banks are obliged to reimburse their customers for any fraudulent activities that may occur on their accounts, but in a large number of cases the banks will only reimburse part of the claim or often, will reject the claim completely. Again, this highlights the fact that all businesses should have comprehensive Cyber insurance cover. 

At this point, you may be thinking that the cost of this type of cover would be exorbitant. In our view, the products are very reasonably priced and can be scaled from a sum insured point of view, depending on your risk, affordability etc.

We urge all our clients to review their cyber security and their cyber insurance policies. AIB Cape is just a call away should you need advice on your current cyber policy or should you require a quote on our cutting edge Cyber product (which includes fraudulent loss of funds from bank accounts).

This article is the first in a series of articles on this topic. In months to come, we will explore the typical cyber risk questions, what generally is not covered, the quote process etc.

Lastly, and as always, AIB Cape remains at your service.

June 21, 2021

Posted In: Uncategorized

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