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Technology is transforming the transportation industry, but it is also creating new opportunities for cybercriminals. Today, many cargo theft schemes begin not with a stolen truck, but with a compromised email account, a fraudulent carrier profile, or manipulated shipment instructions.

Criminals are increasingly using phishing attacks, stolen credentials, and impersonation tactics to infiltrate transportation networks, redirect freight, and facilitate cargo theft. As these threats evolve, many transportation companies are discovering that traditional cargo and liability policies may not fully address losses arising from cyber-enabled fraud or shipment diversion.

Many companies assume their cargo, property, or liability insurance policies will respond to losses resulting from cybercrime. However, traditional insurance policies may not fully address losses involving:

• Social engineering scams

• Fraudulent funds transfers

• Compromised email accounts

• Cyber-enabled cargo theft

• Ransomware attacks

• Business interruption caused by cyber incidents

• Data breach response and recovery costs

As cybercrime and cargo theft become increasingly connected, businesses may discover unexpected coverage gaps following a loss.

• Social engineering and phishing attacks

• Fraudulent funds transfers

• Ransomware and cyber extortion

• Business interruption losses

• Data recovery and forensic investigations

• Cyber-enabled cargo theft incidents

For freight brokers, logistics providers, and importers, cyber insurance may be one component of a broader risk management strategy.

As cargo theft increasingly stems from cybercrime and sophisticated fraud schemes, certain cyber insurance policies may offer an Undelivered Goods or Services Endorsement intended to address aspects of this emerging exposure. Depending on its wording, the endorsement may remove or modify an exclusion related to payments made for goods or services that are not ultimately delivered. Any resulting coverage remains subject to the applicable policy's terms, conditions, limitations, and exclusions.

For transportation companies, freight brokers, logistics providers, and supply chain organizations, this type of endorsement may address certain losses arising from fraudulent carrier schemes, shipment diversion fraud, impersonation scams, load board fraud, and other cyber-enabled cargo theft events. As criminals continue to exploit technology to infiltrate transportation networks and redirect freight, specialized endorsements may provide an additional layer of protection, subject to underwriting and the applicable policy's terms, conditions, limitations, and exclusions.

Consider a freight broker that receives a load tender and hires what appears to be a legitimate motor carrier. A cybercriminal uses stolen credentials, a hacked email account, or a fraudulent carrier identity to impersonate the carrier and pick up the shipment. The cargo disappears, and payment has already been made for transportation services that were never actually delivered.

Without this endorsement, there could be a concern that the loss falls within an exclusion for payments made for goods or services that were not delivered. With the endorsement attached, the exclusion may be modified or removed, subject to the applicable policy's terms, conditions, limitations, and exclusions. The actual coverage outcome would depend on the specific policy language and the facts and circumstances of the claim.

For freight brokers, logistics providers, and supply chain companies, this kind of endorsement may help address exposures such as:

• Fraudulent carrier scams

• Cyber-enabled cargo theft

• Load board fraud

• Impersonation schemes

• Shipment diversion fraud

• Transportation services paid for but never performed

Cybersecurity is no longer just an IT concern. It can also present cargo security, financial, and business continuity risks. As cargo theft increasingly involves cybercrime and fraud, transportation companies should review their traditional insurance programs and cyber coverage with an independent insurance advisor to evaluate potential gaps and available options.

Contact IB&M at info@intlbondmarine.com to learn more about protecting your business, your data, and your cargo from today's evolving cyber threats.