Search This Blog

Showing posts with label insurance. Show all posts

SEC: Watch Out for Hurricane Ida Related Investment Scams

 

The Securities and Exchange Commission (SEC) has issued a warning about fraud associated with Hurricane Ida, which wreaked havoc in numerous states last week with torrential rain and tornadoes, leaving millions without power. 

The SEC's Office of Investor Education and Advocacy releases investor alerts regularly to caution investors about the latest investment frauds and scams. Fraudsters would most likely target people who may receive compensation from insurance companies in the form of huge payouts as a direct result of Hurricane Ida's destruction. 

The SEC explained, “These scams can take many forms, including promoters touting companies purportedly involved in cleanup and repair efforts, trading programs that falsely guarantee high returns, and classic Ponzi schemes where new investors' money is used to pay money promised to earlier investors." 

"Some scams may be promoted through email and social media posts promising high returns for small, thinly-traded companies that supposedly will reap huge profits from recovery and cleanup efforts." 

AccuWeather CEO, Dr Joel Myers calculated that Hurricane Ida caused almost $95 billion in total damage and economic loss. Millions of individuals will now have to deal with insurance companies to cover the cost of water damage and other difficulties caused by the hurricane's aftermath. 

The SEC added that following the devastation by Hurricane Katrina in 2005, they were compelled to take action against hundreds of false and misleading statements concerning alleged business prospects.

Precautionary Measures

In the context of mitigating the risk and preventive measures, SEC urged, "Be sceptical if you are approached by somebody touting an investment opportunity. Ask that person whether he or she is licensed and whether the investment they are promoting is registered with the SEC or with a state." 

"Take a close look at your entire financial situation before making any investment decision, especially if you are a recipient of a lump sum payment. Remember, your payment may have to last you and your family for a long time." 

This advisory follows the one issued by the FBI's New Orleans office, which warned the public about an elevated risk of scammers attempting to profit from the natural calamity. 

"Unfortunately, hurricane or natural disaster damage often provides opportunities for criminals to scam storm victims and those who are assisting victims with recovery," the FBI warned. 

The FBI also offered a list of safeguards that victims of natural disasters should follow to avoid getting scammed, including: 
  • Unsolicited (spam) emails should be ignored. 
  • Be cautious of anyone posing as government officials and requesting money via email. 
  • Clicking on links in unsolicited emails is not a fine decision. 
  • Only open attachments from known senders; be wary of emails purporting to have photos in attached files, as the files may contain viruses. 
  • Do not give out personal or financial information to anybody asking for donations; doing so might jeopardize your identity and leave you vulnerable to identity theft. 
  • Be vigilant of emails purporting to provide employment. 
  • Before transferring money to a potential landlord, do your research on the advertisement.

AIG Launches New Cyber Threat Analysis Service to Understand Cyber Risks

American International Group Inc., an American multinational insurance company, has launched a new system for cyber threat analysis.

The system scores companies on the degree to which a cyber attack may affect their business and the potential costs involved. It compares the company’s risk of having a breach to the safeguards it has in place.

Tracy Grella, AIG’s Global Head of Cyber Risk Insurance, in an interview said, “AIG’s underwriters have been using the computerized analysis since November, which combines information from a new insurance application designed for the process and data about current cyber threats to generate scores on various related factors.”

With mounting cyber threat to businesses, this system hopes to provide a way to measure the risk involved in a business so that cyber coverage in insurance may be taken into consideration.

This comes after AIG in October said that they will review all coverage types to check for cyber risk and give insurers a clear picture about cyber coverage and estimated financial exposure. They will also create a cyber-risk report for the customers with the analysis scores for understanding and comparing.

Along with this, AIG also announced their partnership with cybersecurity companies CrowdStrike Inc and Darktrace, on Tuesday, to launch CyberMatics, a service that verifies information AIG receives from customers’ cybersecurity tools.

Darktrace Chief Executive, Nicole Eagan, said, “The service uses artificial intelligence, or the ability of machines to carry out tasks normally associated with human intelligence, to look inside an insured company’s network for strengths and vulnerabilities.”

Tracy Grella said that while companies are not required to use the service, those who do may be able to negotiate more favourable policy terms.