Cyber Insurance Claims Denied: Three Real Irish SME Scenarios and What Went Wrong.

Did you know that over 30% of cyber insurance claims in Ireland are denied, often leaving businesses exposed and out of pocket? Many Irish SMEs invest in cyber insurance, believing it offers a safety net against digital threats. However, the reality can be starkly different when a claim is actually made.

This article explores three anonymised, real-world scenarios from Irish SMEs where cyber insurance claims were denied. We will uncover the specific reasons for denial and, crucially, what steps could have prevented these costly outcomes. Understanding these pitfalls is essential for any business relying on cyber insurance.

Case 1: The Ransomware Attack and the Missing MFA

Problem: A small engineering firm in Donegal, specialising in bespoke machinery, fell victim to a sophisticated ransomware attack. Their entire network was encrypted, halting production and causing significant operational disruption. The attackers demanded a substantial ransom to restore access to their critical systems.

Consequence: The firm immediately filed a claim with their cyber insurance provider, expecting coverage for business interruption, incident response, and data recovery costs. However, their claim was swiftly denied. The insurer cited a specific exclusion clause related to Multi-Factor Authentication (MFA).

Solution: The policy explicitly stated that MFA was required on all email accounts used for business operations. The firm's IT audit revealed that while some critical accounts had MFA, the compromised email account, which was the initial point of entry for the ransomware, did not. This oversight meant the policy's terms were not met, invalidating their claim.

Action: To prevent such a denial, the firm should have implemented MFA across all employee email accounts and other critical systems. Regular security audits, perhaps guided by the NCSC Ireland's advice on securing your business, would have identified this gap before an incident occurred. Ensuring compliance with policy terms is as vital as having the policy itself.

Case 2: The BEC Fraud and the Authorised Transfer

Problem: A Sligo-based tourism operator received an urgent email, seemingly from their main construction contractor, requesting an immediate change in bank details for an upcoming payment. The email looked legitimate, complete with company logos and a familiar tone. An employee processed the change and authorised a significant payment to the new account.

Consequence: Days later, the legitimate contractor enquired about the overdue payment, revealing the fraud. The tourism operator reported the incident to An Garda Síochána and filed a claim for the lost funds under their cyber insurance policy. The claim was denied because the payment was deemed

Related Reading

• Cyber Insurance for Donegal and Sligo SMEs: What Local Businesses Need to Know.
• The Cyber Insurance Gap: Why Most Irish SMEs Are Underinsured and Don't Know It.
• First-Party vs Third-Party Cyber Insurance: What Every Irish SME Director Needs to Understand.

Take the Next Step

If you are unsure where your business stands on cybersecurity, we can help. Book a free, no-obligation 20-minute call with our vCISO team. We will give you an honest assessment of your current posture and tell you exactly what to prioritise first.

Book Your Free Consultation | Download Our Free Guide