A federal court last month turned away an insurer’s legal arguments seeking to avoid financial institution bond coverage for a bank’s losses resulting from a borrower’s use of forged documents to obtain a $3.6 million loan. In doing so, the Arizona court rejected Everest National Insurance Company’s narrow construction of the bond’s “Securities” insuring agreement and ruled that the notice-prejudice rule applies to a financial institution bond.
Continue Reading Federal Court Rejects Insurer’s Narrow Interpretation of Securities Insuring Agreement and Applies Notice-Prejudice Rule to Financial Institution Bond
Financial Institution Bond
Beazley Reports Major Increase In Social Engineering Attacks
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Posted in Cyber
In its third quarter report, insurer Beazley reported a nine-fold increase in social engineering attacks (i.e., deception-based fraud/crime) as compared to the same time last year. So far, the majority of social engineering attacks in 2017 were focused on the professional services sector (18%), followed by financial institutions (9%), higher education (9%) and healthcare (3%). The report also notes continued high rates of unintended disclosure via employee negligence across all sectors (29%), second only to affirmative hacking or malware attacks (34%).
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Federal Court Says Wrongdoer’s False Statement In Application Does Not Permit Carrier To Rescind Financial Institution Bond And Avoid $3 Million Loss
By Grayson L. Linyard on
Posted in Duty to Defend, Property
In a March 17, 2017 opinion, a Minnesota federal court rejected a financial institution bond carrier’s attempt to rescind the bond it issued to a credit union despite the credit union’s manager making a false statement in the bond application that she had no knowledge of any act which might give rise to a claim, after she had embezzled $3 million. See National Credit Union Administration Board v. CUMIS Insurance Society, Inc., No. 16-139, 2017 WL 1047256 (D. Minn. Mar. 17, 2017). The court refused to attribute the embezzler’s misrepresentation to her employer because, in embezzling the credit union’s money, she was working solely for her own benefit.
Continue Reading Federal Court Says Wrongdoer’s False Statement In Application Does Not Permit Carrier To Rescind Financial Institution Bond And Avoid $3 Million Loss