Jenner & Block

“AIG Cyber Coverage Case Follows Established Insurance Law,” Insurance Law Update

In the December Insurance Law Update, Partner Jan A. Larson and Associate Huiyi Chen focus on email spoofing as a new loss mechanism within an insurance context.  Email spoofing involves the use of presumably legitimate and familiar email address to trick an individual or entity into transferring funds to a source later discovered to be fraudulent.  The authors highlight a decision in SS&C Technologies Holdings v. AIG Specialty Insurance Co. in the US District Court for the Southern District of New York, where the court reinforced fundamental principles in insurance and contract laws, such as protecting the reasonable expectations of the policyholder.  “Efforts by insurers to unreasonably stretch the interpretation of policy provisions in order to deny coverage run the risk of laying the foundation for a bad faith claim,” the authors suggest.  The Update was published in Law360.