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Survey Report

Insurance Marketplace Realities 2021 – Fidelity/crime

Financial, Executive and Professional Risks (FINEX)

November 18, 2020

Although social engineering has been around for several years, lately it has garnered greater attention with more severe and frequent losses.

Rate predictions

Rate predictions: Fidelity/crime
  Trend Range
Overall increase (purple triangle pointing up) +5% to +15%; higher for the most challenged classes

Key takeaway

Although social engineering has been around for several years, only recently has it won the attention we believe it deserves. Losses are more frequent and, in some instances, severe, attracting media and risk manager attention.

Companies of all sizes and industries are increasingly impacted by 401(k) fraud losses, which represent a new twist on social engineering schemes. Fraud involving 401(k) accounts is rising but standard crime policies may not cover the losses. Pension fraud policies protect employers and their plan participants against these crimes.

  • While most people think of their 401(k) plans as safely tucked away for retirement, these accounts may be particularly vulnerable to fraud, and employers may face coverage gaps as a result of high policy deductibles, standard policy exclusions and insuring agreements that are not triggered based on the fact patterns of some loss scenarios.
  • Pension fraud policies, relatively new products in the marketplace, can offer several advantages:
    • Coverage: Loss of funds sustained by a plan participant as a direct result of the fraudulent impersonation of the plan participant is covered. Coverage applies to fraudulent instructions received by the plan administrator or the insured.
    • Limit: Policies afford an each-and-every-loss limit with no aggregate. Available limits range from $100,000 to $500,000 per plan participant.
    • Deductible: Policies typically do not have a deductible.

Crime underwriters are taking advantage of general hard market conditions to raise rates, citing sustained frequency of social engineering losses and concerns about the increased risk associated with continued necessity for employees to work remotely.

  • Insurers are looking to “right size” premiums, both on a primary and excess basis, as many risks have been priced at minimum rates for several years. Insurers are also focused on ensuring deductibles are adequate.
  • The most challenged sectors — gaming, casinos, crypto-related firms, the cannabis industry, ATM and credit card risks — are seeing increases beyond the range outlined above.
  • London continues to correct pricing and deductibles while reducing capacity.
  • Insurers are closely monitoring aggregate exposure to social engineering fraud and, in some cases, reducing limits and/or increasing deductibles. Insurers continue to carefully underwrite this exposure and will only consider offering broader coverage and/or higher sublimits (for additional premium) where the controls and procedures presented are best in class.
  • As a result of several court decisions finding coverage for social engineering schemes under alternative insuring agreements, namely computer fraud and funds transfer fraud coverage, exclusionary language is being added to clarify that social engineering losses will only be covered under an explicit social engineering coverage grant, which is typically offered on a sublimited basis.
  • Increases in computer hacking and social engineering fraud exposure resulting from remote working continues to present a security threat to businesses.
  • Insurers continue to evaluate cyber aggregation. Select insurers have enterprise-wide initiatives to delete, exclude or amend cyber-related coverages (e.g., extortion and destruction of data) in their crime policies, as they are also typically covered under cyber and/or K&R policies.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.


Director, National Fidelity Product Leader

U.S. Fidelity Thought Leader, FINEX North America

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