CASE STUDY ONE: Extenstive Storm Damage

The immediate attention to a claim can be the difference between minimal business disruption and long drawn out process that can negatively impact on sales and supply.

Following the recent purchase of three businesses with operations in Melbourne, Sydney, Newcastle and Perth, the Australian parent company invited Midas to participate in a competitive tender for their insurance business. Midas Insurance Brokers won the tender and were appointed in May 2015.

The morning after the policy documents were signed, Midas received a call from one of the Sydney based businesses advising that their premises suffered significant storm damage, resulting in water entering the warehouse and cool room panelling. As a supplier to the major supermarket chains, disruption to supply, particularly for fresh products needed to be addressed urgently. Midas arranged for the assessors report, damaged goods report and photographic evidence to be completed on the same day. Arrangements for alternative office accommodation, bathroom facilities and cleaning of the premises to food grade standard. Were made within 48 hours.

Due to the extensive storm damage in Sydney, the insurance company advised that it would take three weeks for their assessor to assess the damage. The report provided by Midas, was accepted by the insurance company and it was used as the basis for settlement of a claim in the order of $600,000.

CASE STUDY TWO: Cyber Insurance

Distribute.IT was founded in 2002 by brothers Carl and Alex Woerndle as a web-based start-up. By 2011, Distribute.IT had secured 10 per cent of the market for Australian domain names, held multiple international domain accreditations and had 30,000 hosting clients through 3,000 active resellers

The initial breach

On Friday June 3, 2011, Woerndle received a call from his CIO alerting him to a breach in the company's network. "We had about 30,000 clients and a minimum of two per day were targeted on our network, so we were used to managing security," says Carl Woerndle.

The hacker had managed to bypass the company's entire security protocol, get behind its firewall and gain access to its master user access information. This event was the catalyst for a three-week nightmare ride for all involved with the business and its clients. Distribute.IT was proactive in its response and compliance obligations, re-building most of its network over the next week.

The destructive attack

One week later, Distribute.IT's network monitoring system went crazy. The IT team watched servers go offline every few seconds, as the hacker had regained access to the company's network, before escalating into an extremely malicious attack.

The hackers targeted and destroyed servers inside Distribute.IT's network, including back-ups, then locked the IT team out, meaning the only way to get control was to 'pull the plug' at the data centre. This attack targeted Distribute.IT's ability to trade. The company had to rebuild its entire infrastructure from the ground up ...again.

Within four days Distribute.IT started to lose clients. The trust and brand equity that had been built up over nine years had eroded. "My brother and I knew at this point that our business was gone," Woerndle says.

It took the brothers six to 12 months to get over the incident. Carl has recovered and still has an entrepreneurial spirit. He has a few "software plays in the background" that he is trying to develop. "It's a long journey back," he says.

CASE STUDY THREE: Misappropriation of Funds

Employees are often placed in positions of trust which occasionally are proven not to be appropriate. The insured party, a freight forwarder based in Sydney, was acting as freight collection agent for customers in Australia who imported goods from Italy.

Freight charges paid by the importer was deposited into a separate Cash Management Account, from which shipping line payments would be made when the goods arrived in Australia. A review of business operations by the insured party identified low cash flow, the insured party assumed that this was because importers were not paying their freight promptly. Having confirmed that all dues had been paid promptly, the insured party commenced an internal investigation which identified that the company accountant had misappropriated funds in excess of $230,000.

As part of the process of the most appropriate insurance policy, the insured party had accepted the Midas recommendation to include "Fraudulent or dishonest activity by an employee which the insured is legally liable to settle" in their policy. As a result, the claim in excess of $230,000 was paid out by the insurance company and the business did not suffer financial loss.