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Survey Report

Insurance Marketplace Realities 2022 – Fidelity/crime

Financial, Executive and Professional Risks (FINEX)
N/A

November 15, 2021

Fidelity/crime coverage continues to evolve with unique and sophisticated hacking and trickery schemes, though employee dishonesty claims remain the number one driver of crime losses.

Rate predictions

Rate predictions: Fidelity/crime
  Trend Range
  increase (purple triangle pointing up) +5% to +10%

Key takeaway

What used to be a benign line of coverage continues to evolve with unique and sophisticated hacking and trickery schemes, though employee dishonesty claims remain the number one driver of crime losses.

Insurers are focused on eliminating coverage that may also be addressed in cyber policies.

  • Fidelity/crime underwriters are eliminating destruction of data clauses and relying on equivalent coverage available under cyber policies.
  • The few carriers that still provide kidnap and ransom (K&R) and extortion coverage under their FI bonds are determining whether to maintain the coverage, while some have dropped it, arguing that the cyber and/or K&R markets should step in.
  • Cyber underwriters are often removing previously afforded crime coverages, including social engineering fraud, suggesting that the crime policy may be better suited to respond.

New exclusions and coverage restrictions are emerging as a result of court decisions, evolving technology and loss trends.

  • As courts continue to interpret crime policies in ways that were perhaps not originally intended, insurers have been quick to respond with clarifying endorsements restricting coverage.
  • Explicit cryptocurrency and non-fungible token exclusions have started to appear in policies.
  • One leading market has recently added a ransomware exclusion, making it clear that the crime policy will not cover ransomware losses. We expect other markets will follow suit.

Social engineering fraud remains a top focus for underwriters.

  • Select insurers are pulling back on social engineering limits previously afforded.
  • Underwriting diligence remains a top priority, with an emphasis on call-back verification procedures.
  • Loss data continues to show that social engineering fraud is generally more of a nuisance/frequency concern than a severity concern.

Disclaimer

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.

Contacts

Director, National Fidelity Product Leader

U.S. Fidelity Thought Leader, FINEX North America

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