Jurisdiction: United States

Michigan Federal Court Finds No Coverage for Policyholder Duped By Fake Email

A policyholder was tricked by emails ostensibly from a vendor invoicing for work provided and sent $800,000 to the fraudster’s account.  In an action filed by the insured, a federal district court for the Eastern District of Michigan has agreed with the insurer there is no coverage for the loss.  The policy’s “computer crime” insuring agreement goes to “direct loss” of money “directly caused by” the “use of any computer.  According to the court, there were “intervening events between” receipt of the emails and transfer of the funds which “preclude a finding of ‘direct’ loss ‘directly caused’ by the use of any computer.”  The court, citing other jurisdictions’ cases about fraudulent emails, said “there was no infiltration or ‘hacking’” of the insured’s computer system and that the emails, although received via computer, “did not directly cause the transfer of funds.”  Instead, the policyholder itself took all the steps to effect the dispatch of the funds based on information in the emails. American Tooling v Travelers (E.D. Mich Aug. 1 2017). v. Travelers Cas. & Sur. Co., No. 16-12108 (E.D. Mich., Aug. 1,...

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NY Federal Court Finds Coverage for Policyholder Duped By Computer Fraudster

A policyholder was hit by a fraudster that developed emails mirroring the format of the company’s emails and showing knowledge of sensitive company details. Because of the ersatz emails, company employees were tricked into arranging a $4.8 million wire transfer to the perpetrator’s account. The federal district court for the Southern District of New York found coverage for the policyholder. The judge distinguished other recent decisions, finding “coverage [under the computer fraud coverage section] fraud where the perpetrator violates the integrity of a computer system through unauthorized access ….” According to the opinion, the funds transfer coverage section also applies because the thief impersonated an authorized representative and prompted company personnel to effect the wire transfer. Medidata Solutions Inc. v. Federal Ins. Co., No. 15-cv-907 (S.D.N.Y., July 21,...

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NAPSLO Merges with AAMGA to form Wholesale and Specialty Insurance Association (WSIA)

The insurance world has its share of industry organizations, and a new one has arrived.  According to a joint announcement on July 25, 2017, the National Association of Professional Surplus Lines Officer (“NAPSLO”) merged with the American Association of Managing General Agents (“AAMGA”) to produce a new organization called the Wholesale and Specialty Insurance Association (“WSIA”). WSIA will combine the specialties of NAPSLO and AAMGA and represent the spectrum of whole, specialty and surplus lines interests and matters.  The board of WSIA will include members from both NAPSLO and AAMGA, with Corinne Jones serving as president. WSIA intends to offer the same opportunities and similar programs NAPSLO and AAMGA previously offered, along with host of additional services, educational programs and activities.  Programs such as the under-40s initiative of each legacy entity will continue as well under one, combined group. The potential for AAMGA to bring together industry participants from different sectors of the insurance arena is encouraging, and we will continue to report on any new initiatives and...

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New Chief of Staff Appointed to the Florida Office of Insurance Regulation

Michael Yaworsky has been appointed as Chief of Staff for the Florida Office of Insurance Regulation. The appointment is effective Monday, July 24, 2017. Mr. Yaworsky previously serviced as Legal Counsel for the Georgia Office of Insurance and Safety Fire Commission and prior to that served as General Counsel for the Office of President Pro Tempore in the Georgia Senate....

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Massachusetts Legislation on Motor Vehicle Insurance Quotes

The Massachusetts Joint Committee on Financial Services recently held a hearing on legislation that would require motor vehicle insurers to check an applicant’s driving history before providing a premium quote. House Bill 3682, titled “an act relative to fair and accurate motor vehicle insurance quotes,” is sponsored by the Committee’s Vice-Chair, Representative Michael Finn. The bill has received support from a trade association representing insurance agents as well as some insurance companies. However, trade groups representing insurers are opposed to the legislation, arguing that any lag between preliminary and verified quotes stems from incompatibility between technology at insurance companies and the State’s Registry of Motor Vehicles that is beyond a company’s...

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New York Department of Financial Services Offers Online Relicensing

The New York Department of Financial Services now allows agents and brokers whose licenses have lapsed/expired within the previous two years to submit an online application to be re-licensed.  The online system will help to expedite the re-licensing process.  Previously, re-licensing required a paper application. The re-licensing process is open to property/casualty and life and/or accident/health agents and brokers, as well as life and general consultants and life settlement brokers.  A resident licensee seeking to be re-licensed must complete a re-licensing exam or hold another license for the same lines of authority being applied for.  Non-residents seeking re-licensing must be in good standing in their home state. Link:...

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Connecticut Enacts Senate Bill 260; Establishes Task Force to Study Autonomous Vehicles

Governor Dannel P. Malloy recently signed Senate Bill 260 (“SB 260”) into law. SB 260 authorizes the Office of Policy and Management, the Department of Motor Vehicles and the Department of Emergency Services and Public Protection to establish a pilot program pursuant to which certain municipalities may permit manufacturers to test autonomous vehicles on those municipalities’ roads. SB 260 also creates a 15-member task force to study autonomous vehicles and develop recommendations for regulating such vehicles. The task force must submit interim reports of its findings and submit a final report by January 1,...

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