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Issue Date: May 2002 (es)

Cyber liabilities cover pre-empts pending e-commerce bill

1 May 2002

With the imminent introduction of the Electronic Communications and Transactions Bill, SA corporates of all sizes will be extensively exposed to cyber liabilities arising from their e-activities. Under the new legislation, cyber liabilities will carry severe penalties for transgressors, including up to five years imprisonment and fines, says Craig Smythe of brokers Glenrand MIB, who have launched 'Esurance' cover for these liabilities.
Craig Smythe, Glenrand MIB Professional Services
Craig Smythe, Glenrand MIB Professional Services
The Bill will bring South Africa in line with the majority of developed nations where electronic transactions are already in the legal domain. Internet risks such as defamation, breach of intellectual property rights, breach of privacy and data protection rights, including losses to third parties, have taken on a new dimension in the virtual domain. Other risks arise from the actions of hackers and the effects of ever increasing numbers of viruses. Yawning gaps in cover have opened up between standard traditional policies such as liability programmes and professional indemnity, business interruption and - computer crime arising out of e-activities.
Insurable risks
These risks gave rise to eight critical survival areas of exposure, from third party actions of a civil and criminal nature, to your companies own first party losses which could now, for the first time in South Africa, be covered by the Esurance policy. Says Smythe, "First party covers in the policy include loss of computer records and damage to systems, the use of computer systems for theft, extortion relating to websites or computer systems and legal fees incurred with the enforcement of e-related intellectual property rights and business interruption. Other covers are for sexual harassment by e-mail, breaches of confidentiality rights or rights of privacy."
The policy is couched largely in terms of international precedent for such risks and it addresses many of the crucial issues contained in the draft Bill. Underwritten by Lloyds, it is one of the only comprehensive covers of its type in South Africa.
SA business now faces numerous potential third party actions he says. "Case precedents are proliferating worldwide and the scale of the problem is growing exponentially along with e-commerce volumes. Millions of rands worth of business is transacted on the Internet by SA corporates currently and this figure continues to grow exponentially."
Concludes Smythe, "Merely operating e-mail is sufficient to open the way to a raft of such exposures. Precedents for such liabilities abound. General trading companies in South Africa rarely have the necessary insurance in place to cover the additional exposures posed by the use of the Internet and/or email."
Craig Smythe, Glenrand MIB Professional Services

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