Which Email Mistakes Can Insurance Cover?

Firms should be on their guard with regard to their marketing and communications campaigns.

Since the introduction of General Data Protection Regulations (GDPR) it was hoped that the pace of unsolicited marketing would slow down. But that doesn’t appear to have been the case – often our inboxes are full with spam and junk emails.

However, The Information Commissioners Office (ICO) has been working hard behind the scenes investigating and collating evidence . They have so far issued 101 enforcement actions and fines during the period November 2018 to the 20 May 2022. Although that doesn’t sound a lot it should be noted that 64 of these have been issued in the last 12 months. They appear to be catching up on offenders. These actions include many with five or six-figure fines for those breaching the Privacy and Electronic Communications Regulations (PECR) – see here

As you will see from the ICO website a fair proportion of those fines have been handed out to firms in the financial services and care sectors – and even the cabinet office!

A recent example is a fine of £80,000 imposed on an unregulated (by the Financial Conduct Authority) financial services sector company. They sent out over 375,000 marketing text messages during the period January to July 2020 promoting the Government’s debt management scheme during the early pandemic. Both the fine and enforcement notice were handed out to the business responsible of breaching Regulations 22 and 23 of the PECR

The ICO’s guidance makes it clear that firms cannot engage in marketing through electronic communications, unless the recipient has provided their consent.

Whilst a Legal Expenses Insurance may pick up the cost of defending a case, the fines imposed by regulators are typically uninsurable, so any PECR fine for email or electronic marketing breaches could be a big financial blow.

However, other emails that a company may send out could also land them in hot water. This may be covered by insurance. Such emails would typically be those sent in error by an employee, often because they have picked up the wrong recipient from an automated email address book. This could result in sensitive information being sent to the wrong person, perhaps even a competitor of the intended recipient. In such an instance, the intended recipient could potentially sue the company whose employee made the error.

In ‘professional services’ or consultancy sectors such as financial services or the legal profession, this is always a risk, as many emails contain highly sensitive financial information. Professional Indemnity Insurance can provide cover for the risk of legal action from such mistakes.

Professional Indemnity Insurance covers a business against their legal liability to provide third parties with compensation for losses or damages caused by offering wrong advice or impacting a third party in a negative way, through their delivery of their service. Any type of business offering consultancy services, such as a financial adviser, accountant, surveyor or architect, should have this cover in their armoury of insurance defences. It will not only cover mistakes and mis-advice but also assist should the actions of a fraudulent or malicious employee impact a client business. Other benefits can include cover for infringements of intellectual property rights, or lost documents.

To discuss Professional Indemnity insurance risks and advise you on other relevant covers for your business please get in touch. To find out a little of who you are speaking to see here

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