Cyber Insurance Claims from Fraudulent Instruction Scams Rise: Beazley

Organizations are being forced to deal with an increased threat to their operations from fraudulent instruction scams, according to specialist insurer Beazley’s most recent Breach Report.

According to the insurer, fraudulent instruction incidents reported to Beazley Breach Response Services quadrupled in 2017, with policyholders incurring losses ranging from a few thousand dollars up to $3 million.

With claims amounts in 2017 averaging $352,000, fraudulent instruction has rapidly become a significant financial threat to many organizations, the insurer said.

Under fraudulent instruction scams, criminals use hacking and phishing techniques to accumulate information that allows them to send plausible-looking requests to transfer funds to bogus accounts. In addition to losing money, organizations may also have to conduct extensive systems analysis to ensure that individuals’ personal and private data have not been compromised.

The top three industry sectors affected in 2017 were professional services (22% of the total reported to Beazley), financial services (21%) and retail (12%), but the report says incidents are growing across all sectors, and in particular where single large transactions, such as real-estate purchases, are involved.

“Cyber-criminals are finding new ways of getting organizations to part with their hard-earned cash,” said Katherine Keefe, global head of BBR Services commented. “In 2017 we saw fraudulent instruction emerge as a new trend which offers significant reward for the perpetrators in return for little effort, but brings potentially devastating financial consequences for the victim.”