Claim compromised after crew fatality

A P&I correspondent, was appointed by a P&I Club to manage a sensitive crew claim following the death of a seafarer onboard. The correspondent was tasked with liaising with the family of the deceased to facilitate the settlement of compensation from the P&I Club.

During the process, a third party intercepted email communications and impersonated multiple individuals, including the family. Using fraudulent email accounts and fabricated documentation, the fraudster provided false bank details and settlement authorities. Unaware of the deception, the correspondent proceeded with the settlement, transferring the funds to the fraudulent account.

The fraud only came to light when the actual family contacted the correspondent, questioning why they had not received the agreed compensation. By then, the funds, US$200,000, had been transferred and the fraudster had disappeared.

The correspondent immediately notified the P&I Club, which advised them to appoint legal counsel to assist with finalising the settlement and verifying payment to the rightful recipients. The member paid the full settlement amount from their own funds and covered additional legal costs to ensure the family received what they were owed.

Fortunately, the correspondent was covered with ITIC for negligence – the negligence being their failure to spot the fraudulent emails and/or to check the new bank details. ITIC reimbursed the correspondent for the net amount of the loss.

When managing settlements (or any payments), it is essential to verify identities and payment instructions through secure, multi-channel communication. ITIC strongly encourages members to implement robust fraud prevention protocols, including checking bank details via a publicly available telephone number i.e. from a website, not one contained within the emails (as that could be fake) and to have strong internal control systems. You can find more fraud prevention advice on the ITIC website.