A coordinated attack between November 2013 and May 2014 resulted in Interactive Communication International processing 25,553 fraudulent transactions resulting in a $10.7 million loss. It turned the claim into Great American Insurance Company for coverage under its Computer Fraud Policy and coverage was denied. Interactive argued for coverage from the scam because all actions were fraudulent. Great American denied coverage because the fraudulent activity took place because of a vulnerability in the computer system.

Click here to see how the courts responded.

The Computer Fraud Insuring Agreement provides important crime coverage but it was not designed to cover the many hacking and phishing activities that are constantly taking place. Attempting to solve a cyber insurance issue with a crime product can result in a very disappointed client.

Click here for a review of coverage provided by Insuring Agreement A.6: Computer and Funds Transfer Fraud and also the exclusions that apply.

Cyber insurance that is properly designed may cover a loss like the one described in this newsletter. However, it may not. Cyber Insurance remains a very fluid product because the hazards and exposures continue to evolve. ISO has developed a standardized form that can be used to develop a template for comparison but the many carriers providing this coverage continue to innovate.

Click here for a comparison template that could help in evaluating coverage.

Approaching a customer about purchasing cyber insurance can be difficult but explaining to him or her after a loss that coverage could have been purchased but you had never offered it will be even more difficult.

Click here for a letter you might use as a way to start the conversation.