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UK literary agent hit by ransomware attack

The insured, a UK based literary agent, were hit by a ransomware attack in the days following the initial Covid-19 lockdown. As with many SMEs, the insured were still trying to navigate the challenges of working from home, and this made the attack particularly disruptive. The insured acted quickly to appoint their own IT forensic experts and they were able to remove the malicious actors from the system before any data could be exfiltrated. The IT experts recommended the insured rebuild their servers rather than paying any ransom demand.

The insured’s systems were offline for nearly two weeks and their staff had no access to email. The insured believed that they had suffered a loss of gross profit for that two week period and advanced a substantial claim under the business interruption section of their cyber policy. We were appointed by insurers to review that calculation and the costs incurred.

We analysed the financial data and it quickly became apparent that the insured’s methodology was simplistic and the claim was overstated. In particular, the insured had not incorporated the fact that ongoing payments were still being received from existing clients and also that there had been a marked increase in the amount of new business immediately following the outage period (i.e. a catch-up of lost sales). We were satisfied, though, that the insured had lost some new business as a result of the attack.

There was no suggestion of bad faith on the part of the insured. Instead, as with many SMEs, the owners had never been through the process and, understandably, had no experience of calculating a loss of income in line with the policy wording. We therefore fully engaged with the insured and their broker from the outset and explained the issues with the calculation in order to be transparent and manage expectations. We also explained that we were appointed by insurers to provide a neutral assessment of the insured’s claim which gave them confidence that the process was a fair and collaborative one.

The result was that insurers reached an equitable and amicable settlement with the insured. The insured had a positive experience of the insurance process and were pleased that they received a prompt response from insurers.

February 2021
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