Multifactor authentication 鈥 pre-inception misrepresentation
and issue declaratory judgment following an insured鈥檚 alleged misrepresentation of its use of multifactor authentication (MFA) in its application for cyber coverage.
MFA is an electronic authentication method that requires users to successfully present two or more pieces of evidence before being granted access to a site or application.
Background
In its application for cyber coverage, 澳门六合彩资料 Control Services Inc. (ICS) allegedly informed Travelers that it used MFA to protect access to its computer systems, as required by the policy.
Following a ransomware attack on ICS in May 2022, Travelers discovered ICS had only been using MFA to protect its firewall, and not its server and other digital assets, contrary to ICS鈥 policy application, which stated that MFA would be used for all administrative and privileged access.
Travelers stated that ICS made statements in its application that amounted to, 鈥渕isrepresentations, omissions, concealment of facts, and incorrect statements鈥 and that this 鈥渕aterially affected the acceptance of the risk and/or the hazard assumed by Travelers鈥.
鈥淭ravelers said it wants the court to declare the insurance contract null and void, rescind the policy, and declare it has no duty to indemnify or defend ICS for any claim.鈥
Key considerations
Under English law, fair presentation of risk is covered under Section 3 of the , which requires insureds to disclose all material circumstances they (including their senior management) know or ought to know, after having carried out a reasonable search.
Rather than relying on arguments relating to the presentation of risk, in many cases a straightforward exclusion of the peril underwriters don鈥檛 wish to cover can be more effective and easier to enforce.
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