Australia has one of the highest occurrences of extortion in the world. Extortion can affect all companies from large blue chip organisations to SMEs.
The current lack of awareness among business owners means that most organisations are almost never equipped to deal with the financial and reputational ramifications when exposed. Extortion Insurance is designed to protect you.
Extortion can occur through both physical and cyber means. Common extortion culprits may include disgruntled employees, bitter competitors, opportunistic criminals or computer hackers.
As a company, you have a number of legal obligations including your duty of care. Receipt of an extortion demand and failure to have adequate risk protection measures in place may see you breach your Duty of Care, leaving you open to serious legal action from an affected third party.
A real extortion example:
A Melbourne based food manufacturer was forced to conduct a nationwide product recall after receiving an extortion threat. The product recall cost ran into millions of dollars, and severely tarnished the company’s brand, affecting relationships with suppliers and consumers. Sadly, a thorough investigation showed this to be a hoax event.
According to the ABS, Australians are now twice as likely to become victims of extortion (i).
While extortion is a risk outside your control, you can act to mitigate the damaging consequences by including an Extortion policy within your business insurance program.
Key policy benefits:
- Cover for extortion payments
- Replacement of lost, damaged, destroyed, confiscated, wrongfully abstracted, or vanishing extortion monies in transit prior to handover
- Coverage for legal, medical and psychiatric expenses resulting directly from the incident
- Cover for fees and expenses of negotiators
- Cover for some other reasonable expenses incurred as a result of the extortion investigation e.g. travel and accommodation costs, wages for those assisting in negotiating the extortion, fees and expenses of independent Public Relations consultants, etc.
- Appointment of Crisis Consultants who work with you to resolve the extortion event
If the extortion attempt happens to be a hoax, costs and expenses incurred are still covered in most instances.
To find out more about Extortion Insurance and how it can protect your key people while minimising financial exposures, please contact our Commercial Insurance specialists:
The information contained in this documentation should only be considered as general advice. It is not intended to take the place of personal advice. Before acting on this information you should consider the appropriateness of this advice to your particular objectives, needs and financial situation. For a full explanation of policy terms, conditions and limits you should refer to the relevant Insurer’s Product Disclosure Statement which can be obtained from our office. Cover is subject to underwriting acceptance criteria.
Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.