Arch Insurance Company and At-Bay Specialty Insurance Company have filed a subrogation lawsuit against Bank of America after paying more than $1.03 million under commercial fraud insurance policies issued to Blue Logistics Topco and G and B Packing Company. The insurers allege the bank processed unauthorized wire transfers and ACH batches even after the insured reported the activity as fraudulent through the bank’s fraud alert system and contacted its fraud department.
According to the complaint, the incident began with a phone call from someone claiming to represent the bank who attempted to initiate a wire transfer on behalf of a company executive. The accounting manager denied authorizing the transaction and was told the matter would be treated as fraud. The following day, employees allegedly received fraud alerts, marked each transaction as fraudulent through the bank’s alert management system, and later discovered that the transfers had still been completed. The insurers claim the resulting loss exceeded $1 million.
After indemnifying the insured, Arch and At-Bay say they are entitled to pursue recovery from the bank through subrogation. The complaint includes claims under the federal Electronic Fund Transfer Act, New Jersey’s commercial code governing payment orders, negligence, breach of fiduciary duty, and allegations that the bank failed to use commercially reasonable security procedures.
For insurance claims professionals, the lawsuit highlights the growing importance of documenting fraud reporting timelines, preserving banking records, and evaluating financial institution responsibilities after commercial fraud losses. The outcome could influence future subrogation strategies involving banks, particularly where insureds contend that suspicious transactions were identified and reported before funds were released. As with any newly filed lawsuit, the allegations remain unproven, and the court has not ruled on the claims.
