One of our Accountant clients performed wageroll activities on behalf of their client. £45,000 was stolen from the client’s account. It was not clear what had happened, but after further inconclusive investigation it was reduced to two main possibilities – either an external hack of the account had occurred, or there had been an internal theft of the money by one of the accountant’s employees.
The accountant purchased professional indemnity (PI) insurance but not cyber liability cover. There was no triggering event to the PI cover. There was no evidence to conclude what had actually happened, and no claim had been made by the client against the accountant (with whom they had excellent relations). In the absence of cyberliability cover there was no insurance provision to investigate suspected cyber-issues.
The client’s business could not sustain the loss of £45,000 to their cashflow, and the viability of their business was threatened. The accountant therefore wanted to appoint a forensic IT specialist to carry out further investigations, to assist their client and preserve their commercial relationship. The PI insurers declined to cover the costs of such a specialist, citing the legal position that it is the claimant’s obligation to make and prove a claim and that the insured (& their PI insurers) do not have to react until they do. The accountant proceeded to appoint the forensic IT specialist at own cost.
Brunel demonstrated to the insurers that the forensic IT investigation was the appropriate step forward, and although incurred without the insurers’ consent, was reasonable in the circumstances. Brunel also encouraged the view that it was in the insurers’ interest to take a more pro-active approach in order to identify a fraudulent member of staff to prevent further frauds from being committed.
Investigation showed that only the accountants were logged onto the client’s bank account at the time the transfer was made, although it was not determined which machine was used for the transfer. One of the insured’s employees was highly likely to be responsible for the fraud.
The insurers agreed to indemnify the loss to the client’s account and reimbursed the accountant for the forensic IT costs.
As a postscript to the matter, whilst the police arrested the relevant employee, they did not charge them due to what they considered insufficient evidence.
The accountant however has thanked Brunel for all our help in what was an ambiguous and challenging matter!
