Health Insurance Online :: News

Share this news item!

Hacked Company Loses Insurance Battle Over Customer Payment Scam

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

A company recently faced a significant setback after losing an insurance claim dispute related to funds stolen in a fraudulent email scheme.

Cybercriminals infiltrated the business's email system, sending out fake invoices that directed clients to pay into a bogus bank account.

Consequently, two customers inadvertently transferred a total of $66,148 to the fraudulent account.

Attempts to retrieve this money were unsuccessful, and the customers refused further payments to the company.

The company, holding a management liability insurance policy, sought to claim under its third-party crime coverage to recover the outstanding bills from the customers. However, AIG Australia denied the claim, stating that the policy only addressed "direct financial loss" from theft or fraud by a third party, and argued that since the stolen money belonged to customers, the business itself did not suffer a direct loss.

The Australian Financial Complaints Authority (AFCA) reviewed the case and acknowledged the company's loss. However, it determined that the loss did not align with the policy's specific terms. The ruling emphasized that only the company's customers faced direct financial loss, whereas the company experienced an indirect one due to subsequent non-payments.

The AFCA explained that the hack did not meet the company's policy definition of theft, as the stolen funds belonged to the customers, not the business. This discrepancy meant that the policy's electronic and computer crime coverage was not applicable. Additionally, the policy's criteria for "fraudulent act," which required acts of forgery or counterfeiting the insured had acted upon, were not met since the company was unaware of the false invoices.

This case highlights the critical distinction between direct and indirect financial losses in insurance claims, emphasizing the importance of understanding policy terms. For businesses, particularly those prone to cyber threats, it underscores the significance of having insurance coverage that appropriately addresses loss scenarios stemming from such events. It also serves as a cautionary tale of the complexities involved in recovering from cybercrime attacks without adequate protection.

Moving forward, businesses should ensure robust cybersecurity measures to prevent similar email hacks, coupled with clarifying insurance policies for adequate coverage against indirect financial losses as a result of customer fraud. This scenario may lead insurance providers to reevaluate their product offerings, potentially driving the development of more comprehensive cybercrime coverages. Additionally, the financial sector might witness increased discussions on how to formulate clearer policy definitions that align with the evolving nature of cyber threats.

Published:Tuesday, 11th Mar 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Brisbane Hailstorm Sees Over 16,000 Insurance Claims

03 Nov 2025: Paige Estritori

The recent hailstorm in Brisbane has triggered more than 16,000 insurance claims, marking it as a significant event as declared by the Insurance Council of Australia. Both Suncorp and IAG have experienced a substantial influx of claims following the severe weather conditions that affected parts of Queensland and Victoria over the weekend. - read more

Strata Futures Report Proposes National Task Force for Industry Overhaul

03 Nov 2025: Paige Estritori

The recently released Strata Futures Report has put forth a comprehensive set of 64 recommendations aimed at transforming Australia's strata industry. Central to these proposals is the establishment of a national task force, co-funded by the government, to spearhead reforms and foster a high-performing, transparent, and sustainable model of property ownership and governance. - read more

NSW Strata Managers Set to Eliminate Insurance Commissions by 2026

03 Nov 2025: Paige Estritori

In a significant development for the strata management sector, the Strata Community Association New South Wales (SCA NSW) has announced a phased plan to eliminate insurance commissions for managing agents, commencing January 1, 2026. This initiative aims to bolster transparency and trust between strata managers and property owners. - read more

Surge in Mental Health Claims Reshapes Australia's Insurance Landscape

31 Oct 2025: Paige Estritori

Australia's insurance industry is experiencing a significant shift as mental health conditions have become the leading cause of total and permanent disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health issues now account for nearly one-third of all TPD claims, marking a substantial change in the industry's claim patterns. - read more

Australian Super's Claim Delays Raise Concerns Among Members

31 Oct 2025: Paige Estritori

Australian Super, one of the nation's largest superannuation funds, is facing criticism over significant delays in processing insurance claims, particularly those related to income protection and total and permanent disability (TPD). Members have reported prolonged waiting periods, leading to financial hardships and uncertainty. - read more

Click for more Insurance News

Health Insurance Articles

Keeping Your Family Protected: The Importance of Adequate Health Insurance Coverage

The modern Australian family faces a dynamic and ever-evolving set of health needs, with access to quality healthcare remaining a cornerstone of managing our wellbeing. As these needs shift through the different stages of life, the assurance of having a safety net in place can provide unparalleled peace of mind. It's this sense of security that makes adequate health insurance coverage indispensable in today's fast-paced society. - read more

5 Common Mistakes to Avoid When Selecting Family Health Insurance

Choosing the right family health insurance can feel like navigating a maze. With so many options and factors to consider, it's no wonder many Australians find the process overwhelming. The stakes are high, as the wrong choice could not only impact your family's access to healthcare but also strain your finances. - read more

The Importance of Comparing Health Insurance Extras for Maximum Savings

Health insurance is more than just a precautionary measure; it's a vital component in managing both your health and financial well-being. In Australia, where healthcare costs can quickly escalate, health insurance extras serve as a buffer, ensuring that services like dental, optical, and physiotherapy remain within reach. These extras can significantly reduce the out-of-pocket expenses you might otherwise encounter for non-hospital treatments. - read more

The Digital Age of Health Insurance: Comparing Policies Online

The dawn of the digital age has significantly transformed the way we approach nearly every aspect of our lives, and the domain of health insurance is no exception. With the arrival of innovative digital tools, the health insurance landscape has undergone a striking evolution, allowing for unprecedented accessibility and convenience in managing healthcare coverage. - read more

Unlocking Affordable Health Insurance: Tips to Reduce Your Premiums

The current health insurance landscape in Australia can be quite confusing for many people. With numerous options available, it’s not always clear which to choose to balance your budget with your needs. Premiums are on the rise, and Australians are becoming increasingly concerned about the costs of maintaining adequate coverage. - read more

Knowledgebase

Elimination Period:
The time period between an injury and the receipt of benefit payments from an insurer, particularly in disability insurance.

This website is owned and operated by Clark Family Pty Ltd (ACN 010 281 008) as Trustee for the Clark Family Trust (ABN 35 957 893 714), 43 Larch Street Tallebudgera QLD 4228. Clark Family Pty Ltd is an Authorised Representative (AR 1298860) of Unique Group Broker Services Pty Ltd (AFSL 509434) for financial product referrals and an Authorised Credit Representative (ACR 401491) of Saccasan Pty Ltd (ACL 386297). Check our licensing details on the ASIC registers: Clark Family Pty Ltd ACR, Clark Family Pty Ltd AR, Saccasan Pty Ltd, Unique Group Broker Services.

IMPORTANT: We do not provide financial product advice or credit assistance. We act solely as an introducer and refer enquiries to licensed third-party intermediaries, insurers, and lenders - with whom you can then deal directly. We may receive a fee or commission from these third parties in consideration for the referral. Before any action is taken to obtain a product or service referred to by this website, advice should be obtained (from either the third party to whom we refer you or from another qualified intermediary) as to the appropriateness of obtaining those products having regard to your objectives, financial situation and needs. Whilst we have our own process for validating the legitimacy of our referral partners, you should always verify the credentials of your financial adviser before proceeding with recommendations that they may present. Visit the ASIC website for further information.