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AIG, Beazley units prevail in phishing cases



American International Group Inc. and Beazley PLC units won on Wednesday in litigation filed by a real estate management software company exposed to a phishing system, with an appellate court ruling that the company was not entitled to coverage because it never had the stolen funds. .

Richardson, Texas-based RealPage Inc. cooperates with online payment processors to collect rent from tenants and direct those payments to real estate management companies, according to the judgment of the 5th U.S. Circuit Court of Appeals in New Orleans RealPage Inc. v National Union Fire Insurance Co. in Pittsburgh, Beazley Insurance Co., Inc.

Using an online platform RealPage maintains, tenants and property managers send bank account and credit card information that RealPage transfers to third-party processors, who then process the rent payments based on RealPage instructions.

In April 201

8, a RealPage employee clicked on a link allegedly from a third-party processor, San Francisco-based Stripe, Inc., and provided login credentials that were used to access the fund payout information that Real Page provided to Stripes. [19659002] With the help of the stolen data, the criminals Stripe had to pay more than $ 10 million intended for RealPage and its property managers to their own accounts.

Although RealPage and Stripe were alerted to the fraudulent activity and were able to recover some of the payments, they could not get back $ 6 million, the ruling said.

] RealPage replaced its property managers and then filed claims under its $ 5 million commercial crime insurance policy with AIG National Union Fire Insurance Co. in Pittsburgh and its $ 5 million fidelity and criminal policy with Beazley Insurance Co.

established the National Union. RealPage owned the funds that Stripe had earmarked as RealPage's transaction fees and reimbursed the company $ 1.1 million. However, the insurer denied coverage for the rest of the stolen funds because RealPage neither owned nor leased those funds.

Beazley denied coverage because its surplus policy only provided coverage after the underlying National Union policy was exhausted. [19659002] ] RealPage sued National Union and Beazley in the U.S. District Court in Dallas, which ruled in favor of the insurance companies. A court panel of three judges upheld that decision.

National Union coverage stipulates that policyholders must "hold" the funds involved, the ruling said. "Essentially, RealPage provided routing instructions to Stripe, and Stripe executed the transactions and handled the funds transferred from tenants to property managers," the decision said.

"Because RealPage never held the funds in question, the National Union was within its rights. To deny coverage of the stolen funds intended for RealPage's property management clients," the decision stated.

"And since National Union's coverage was not exhausted, Beazley was also within its right to refuse coverage under RealPage's surplus policy, "the panel said. to confirm the judgment of the lower court.

Actors in the case had no comments or did not respond to a request for comment.

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