A true Case Study in how Financial Crime can affect businesses

Financial Crime and Cyber Crime are now among the biggest threats to UK businesses. This real-life case study explains how one business benefited from Financial Crime Insurance

In July 2015, a client of ours suffered a financial loss of just over £375,000. With their agreement, we are now able to share anonymous details of the incident, which demonstrate just how easily such a loss can occur. Thankfully, this client had taken out financial crime cover and their claim was settled in full by September 2015.

The Scenario

Two senior employees of our client were contacted by a person claiming to be from their bank, notifying them that their account had been hacked and monies were being taken from it. Whilst this would make most people suspicious, the caller demonstrated a significant amount of knowledge about their account, and at every stage gave sufficient detail to appear extremely plausible.

That, coupled with the urgency of the account apparently being hacked meant that our client was duped in to providing key information relating to the account. The call lasted 32 minutes, and as a result fraudsters withdrew over £375,000. However, it could have been much worse, as a request for £3 million was rejected.

How Crime Insurance helped the client

Without crime insurance in place, the company would have had to bear the loss themselves, and hope that the sum could be recovered through the criminal courts later on. In this instance, the bank would have excluded the loss under their Terms and Conditions, because the client had divulged account information to a third party. Like most businesses, bearing such a large, unexpected loss could have had serious implications for the future of the business.

What is Commercial Crime Insurance?

Commercial Crime Insurance is typically arranged as an extension of another policy, such as Directors’ & Officers’ Liability Insurance. It can cover a wide range of criminal activity, including those perpetrated by your own staff. Whilst the excesses payable in the event of a claim can be significant, they are still very favourable when compared to losses like the one above.

Criminal activity continues to move away from ‘physical’ crimes such as theft, towards Financial Crime and Cyber Crime. When it comes to thinking about these risks, many companies still fall in to the trap of thinking “it’ll never happen to us”. However, these areas are no longer seen as emerging risks, but are now rapidly becoming mainstream risks for UK businesses. As more businesses bank, sell and operate key business processes online, criminals continue to seize on these opportunities.

If you’d like to find out more about Crime Insurance, contact us through the website or call us on 01943 876631