Recently, the Sixth Circuit rejected Travelers Casualty & Surety Company’s request for reconsideration of the court’s July 13, 2018, decision confirming that the insured’s transfer of more than $800,000 to a fraudster after receipt of spoofed emails was a “direct” loss that was “directly caused by” the use of a computer under the terms of American Tooling Company’s (“ATC’s”) crime policy. In doing so, the court likewise confirmed that intervening steps by the insured, such as following the directions contained in the bogus emails, did not break the causal chain so as to defeat coverage for “direct” losses.
As reported on Hunton’s Insurance Recovery blog, the Second Circuit has rejected Chubb subsidiary Federal Ins. Co.’s request for reconsideration of the court’s July 6, 2018, decision, confirming that the insurer must cover Medidata’s $4.8 million loss under its computer fraud insurance policy. In July, the court determined that the loss resulted directly from the fraudulent emails. The court again rejected the insurer’s argument that the fraudster did not directly access Medidata’s computer systems. But the court again rejected that argument, finding that access indeed occurred when the “spoofing” code in emails sent to Medidata employees ended up in Medidata’s computer system. Continue Reading Second Circuit Stands By Medidata “Spoofing” Decision
On March 15, 2018, the Trump Administration took the unprecedented step of publicly blaming the Russian government for carrying out cyber attacks on American energy infrastructure. According to a joint Technical Alert issued by the Department of Homeland Security and the FBI, beginning at least as early as March 2016, Russian government cyber actors carried out a “multi-stage intrusion campaign” that sought to penetrate U.S. government entities and a wide range of U.S. critical infrastructure sectors, including “organizations in the energy, nuclear, commercial facilities, water, aviation and critical manufacturing sectors.” Continue Reading U.S. Blames Russia for Cyber Attacks on Energy Infrastructure
On January 18, 2018, Hunton & Williams LLP’s retail industry lawyers, composed of more than 100 lawyers across practices, released their annual Retail Year in Review publication. The Retail Year in Review includes several articles authored by our Global Privacy and Cybersecurity lawyers, and touches on many topics of interest including blockchain, ransomware, cyber insurance and the Internet of Things.
On November 3, 2017, Securityroundtable.org published an article highlighting the vulnerabilities businesses face in a world of e-commerce and interconnectivity, and spotlighted a crisis-planning panel hosted by Hunton & Williams held on November 1. Speakers at the event included Lisa Sotto, chair of the Global Privacy and Cybersecurity practice at Hunton & Williams; Eric Friedberg, Co-President of Stroz Friedberg; Stephen Gannon, General Counsel and Chief Legal Officer of Citizens Financial Group; Rick Howard, Chief Security Officer of Palo Alto Networks; Bryan Rose, Managing Director of Stroz Friedberg; Ari Mahairas, Special Agent in Charge of Special Operations/Cyber Division of the FBI; Walter Andrews, Partner at Hunton & Williams; and Tom Ricketts, Senior Vice President and Executive Director of Aon Risk Solutions. Continue Reading Hunton Privacy and Insurance Leaders Address Prevention and Insurability of Cyber Attacks
In March 2017, Syed Ahmad, a partner with Hunton & Williams LLP’s insurance practice, and Eileen Garczynski, partner at insurance brokerage Ames & Gough, co-authored an article, Protecting Company Assets with Cyber Liability Insurance, in Mealey’s Data Privacy Law Report. The article describes why cyber liability insurance is necessary for companies and provides tips on how it can make a big difference. Ahmad and Garczynski discuss critical questions companies seeking to protect company assets through cyber insurance should be asking.
As reported on the Insurance Recovery blog, earlier this week, retailer Tesco Plc’s (“Tesco”) banking branch reported that £2.5 million (approximately $3 million) had been stolen from 9,000 customer bank accounts over the weekend in what cyber experts said was the first mass hacking of accounts at a western bank. The reported loss still is being investigated by UK authorities, but is believed to have occurred through the bank’s online banking system. The loss, which is about half of what Tesco initially estimated, is still substantial and serves as a strong reminder that cyber-related losses are a real threat to retailers and other industries. According to reports, Tesco spent £500 million (approximately $618 million) building up its technology platform over the past seven years. Even that very substantial expenditure was not enough, however, to prevent the recent hack, illustrating the need for robust cyber insurance as a component of any comprehensive cyber protection program.
On October 25, 2016, the Federal Trade Commission released a guide for businesses on how to handle and respond to data breaches (the “Guide”). The 16-page Guide details steps businesses should take once they become aware of a potential breach. The Guide also underscores the need for cyber-specific insurance to help offset potentially significant response costs. Continue Reading FTC Issues Guide for Businesses on Handling Data Breaches
As reported in the Hunton Insurance Recovery Blog, insurance-giant American International Group (“AIG”) announced that it will be the first insurer to offer standalone primary coverage for property damage, bodily injury, business interruption and product liability that results from cyber attacks and other cyber-related risks. According to AIG, “Cyber is a peril [that] can no longer be considered a risk covered by traditional network security insurance product[s].” The new AIG product, known as CyberEdge Plus, is intended to offer broader and clearer coverage for harms that had previously raised issues with insurers over the scope of available coverage. AIG explains its new coverage as follow:
As reported on the Hunton Insurance Recovery Blog, data breach claims involving customer data can present an ever-increasing risk for companies across all industries. A recent case illustrates efforts to recover the costs associated with such claims. A panel of the Fourth Circuit confirmed that general liability policies can afford coverage for cyber-related liabilities, and ruled that an insurer had to pay attorneys’ fees to defend the policyholder in class action litigation in Travelers Indemnity Company v. Portal Healthcare Solutions, No. 14-1944. Syed Ahmad, a partner in the Hunton & Williams LLP insurance practice, was quoted in a Law360 article concerning the importance of this decision. Continue Reading If a Data Breach Occurs and Nobody Accesses Customer Data, Does it Constitute “Publication”?