In the coming years, insurance professionals may need to brace for a wave of cyber coverage denials and even the outright voidance of insurance policies…known as rescissions…on the heels of rising cyber policy claims. (Our Coverage Denied! California Insurance CE course goes into great detail about claim denials and coverage gaps).
The latest attacks seem to center around employees targeted by phishing scams. For some reason (ask any company IT guy to confirm this), employees seem to be more willing to click through risky emails at work than they are at home. When they do, cyber bullies will use malware to hold company records hostage or pose as affiliates or customers. The employee is conned into transferring company money or pay the ransom.
With cyber claims like these on the rise, insurers are pushing back by exploiting gaps in coverage and limit their exposure. Fraudulent claims or payments, they say, were authorized by employees and therefore not covered. The bummer is that most companies and agents believe that a loss due to phishing is a covered event. The best defense is a good loss control program to educate employees about the scams and the need for caution when opening emails. (See our Loss Control continuing education course for more).
By Dave Schoeffler, Director of Affordable Educators, a California Insurance Continuing Education and California Prelicense Education Company.