In view of the increasing number of electronic crimes electronic and computer crime insurance has become a popular type of insurance for banks and other financial institutions. This policy usually serves as an addition to the Financial institutions insurance (BBB).
Objects of insurance:
losses associated with Insured person’s computer and electronic networks, that are mainly the result of the deliberate acts of the Insured person’s employee, however this employee cannot be identified.
Insurable risks:
fraudulent entry of data or instructions to computer networks of the bank, service company, electronic systems of money transfer or customer communications;
liability to clients associated with the third parties’ unauthorized access to computer networks of the bank acting as a service (processing) company for clients;
deliberate spoilage of electronic data and their carriers stored in the bank during recording or transit;
computer viruses;
receipt of false client instructions passed via electronic communication systems;
bank liability to clients for payments effected based on the false bank instructions;
bank liability for operations carried out by the central depositary on securities stored on electronic data-carriers based on the false bank computer instructions;
carrying out operations based on the false Insured person’s client instructions received by fax or telephone.
Insurance terms:
An indispensable condition for policy issue is the preliminary assessment of risk protection – a survey. The survey is conducted by an independent Russian or foreign surveyor company. The main objective of the survey is the assessment of the risk management mechanisms of financial institutions and proposal of recommendations to the Insured person regarding the improvement of its security systems.
A survey is conducted both for the customer and the insurance company. The client needs a survey to identify and close the gaps in his security systems, whereas the insurance company can correctly assess the risk due to such a survey.
Usually a survey is conducted prior to concluding an insurance agreement however in special cases it can also be performed immediately upon the issue of a policy, i.e. after the risk has been actually accepted for insurance. In both cases the Insured person shall follow the recommendations expressed in the final surveyor’s report or propose alternative risk mitigation measures
Insurance premium:
is determined on the basis of a particular amount fixed after the survey and analysis of information submitted by the bank;
depends on a number of factors including the rate of the selected liability limit.
Reinsurance:
If the limit of liability exceeds 1 million US dollars the insurance program development and risk spreading is performed by a foreign broker abroad whereas the insurance policy is issued by Ingosstrakh. The major liability share is reinsured in foreign markets
If the liability limit is below 1 million US dollars Ingosstrakh retains the risk. In this case Ingosstrakh develops programs for a particular client trying to involve in the assessment domestic surveyor companies, whose services are significantly less expensive and of as good quality as those offered by foreign companies.
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