Confusion is reigning among businesses in the UK – and it’s putting them at serious risk, according to one insurance brokerage.
Mansfield-based broker Cowens believes that businesses are confusing crime insurance and cyber insurance – and that’s leaving them at risk to criminals who are using phone lines and the internet to ensnare money through fraud.
According to Karl Sutcliffe, broking director at Cowens Survival Capability, it’s never been more important for clients to ensure they have the right policy in place to cover all eventualities – yet many don’t realise that coverage for fraudsters using social media, text and email to scam money from unsuspecting taxpayers is actually part of a crime insurance policy because it covers real money, as opposed to a cyber policy that is linked to data losses.
“Almost all of us have received a scam HMRC ‘tax rebate’ or something similar and businesses are no different,” he said. “Scam phone calls and emails come through to some business on almost a daily basis containing fraudulent invoices, requests for bank details or cheque signing. These operations are well thought-out and extremely convincing.
“In cases such as the HMRC scams, where actual money is moved from an account, crime insurance is essential. We’ve noticed a surprising number of businesses who believe their cyber policy will fully cover theft of this type but sadly it isn’t the case. The good news is that a crime insurance policy can be easily added to your commercial programme and the premiums are tailored to individual risks – we ensure all of our clients understand the difference in cover and that they have in place exactly what they need as these scams become increasingly widespread and professional.”
Of course, that doesn’t mean that cyber insurance has no use in these circumstances – some do offer cover for businesses for all eventualities. However, this comes with a caveat.
“The issue with crime extensions on cyber policies is that the cover is often quite a lot narrower, even in the cyber space,” said Cowens CEO Paul Chaplin. “Some extensions only cover pure electronic theft, therefore if the insured is involved in any way – for example, if they open an attachment or transfer the money to the criminal, there is no cover at all. It’s also extremely important to remember that a cyber policy will not cover theft by an employee or a face to face trick and a simple crime extension won’t cover the vast majority of standalone crimes. I cannot emphasise enough how important it is to have a competent insurance broker who understands the differences in cover.”
“In cases like the HMRC scams and similar, your employees can be your biggest weakness,” added Sutcliffe. “I’ve seen a business lose thousands because a scam was sent to a busy employee who wasn’t briefed properly or simply wasn’t paying attention. Start with communication and strategy; every member of staff should receive step-by-step training on what to do if they believe they are at risk and should know who to report any concerns to. Businesses should put a whistle blowing procedure in place – your IT Manager must alert your financial director of any suspicious activity for example and appropriate action taken.
“Businesses should have a minimum two step authentication process on all payments and quarterly fraud risk assessments across the whole business. You should work together with your insurance broker and bank to ensure all precautions are in place, as this will ensure your insurer will assist and settle any claims should the worst still happen.
“Finally, remember if something seems too good to be true, it usually is. Always encourage staff to be vigilant, put precautions in place and, together with a tailored commercial crime policy, the potential impact on the business will be significantly reduced.”
