Cyber Coverage for Financial Institutions and Other Commercial Insureds - Part I

The Director of National Intelligence has ranked cybercrime as the top national security threat facing the United States, “higher than that of terrorism, espionage, and weapons of mass destruction.” Reifying that threat, in 2013 the FBI notified 3,000 US companies—ranging from small banks, major defense contractors, and leading retailers—that they had been victims of cyber intrusions. A 2014 Global Economic Crime Survey conducted by PwC found that 7% of US-based organizations lost $1 million or more due to cybercrime incidents in that year (up from 3% in 2011). Twenty percent of U.S. entities recently reported financial losses of $50,000 to $1 million in 2015. A more recent survey estimates that cybercrime will cost global business over $100 billion dollars in 2017. Who—in the absence of effective cyber-security measures that currently seem beyond the reach of business and law-enforcement—will ultimately bear the risk of these losses?    

This seminar—conducted by Richard Mills, the managing partner of McElroy, Deutsch, Mulvaney & Carpenter, LLP in New York—identifies, examines and contrasts the types of insurance coverage that are available under financial institution bonds and commercial crime policies to protect against traditional crimes and cyber-risks, e.g., computer fraud, funds transfer fraud, phishing, spoofing, social engineering, viruses, malware and cryptocurrency [Bitcoin] risks.

The leading and latest court decisions involving cyber-coverage are analyzed to identify issues and trends of interest to any attorney who must litigate in, or counsel clients about, this burgeoning field. Part II of this course continues the discussion.

Learning Objectives:

I.     Identify and distinguish cyber-risks from traditional crime losses

II.    Understand the scope of traditional crime and cyber-risk coverage

III.   Analyze the leading decisions applying existing insurance coverage to these risks

IV.   Emphasize the need for enhanced cybersecurity