- What is crime insurance?
- What types of crime insurance cover are available?
- What are the recent crime statistics?
- What are the recent crime claim trends?
- What is social engineering fraud?
- Why do employees steal?
- Cyber insurance vs crime insurance?
- How can cyber crime business fraud be prevented?
- How do insurers underwrite crime insurance policies?
- What industries are more prone to business fraud?
- PI insurance vs crime insurance
- What is a losses discovered policy?
- How to compare quotes for cyber and crime insurance?
What is crime insurance?
Crime insurance (otherwise known as business fraud insurance) offers financial protection from a criminal or fraudulent taking, obtaining or appropriation of money, securities or property.
The business insurance is typically offered on an all-risks basis and will cover a variety of financial losses and costs.
What types of crime insurance cover are available?
Each insurers crime insurance policy can vary, and the terminology may alter, however the broad covers are comparable under the below sections:
Employee Fraud - Also known as fidelity guarantee insurance, provides cover for an insured's financial loss, caused by an employee's criminal or fraudulent behaviour.
Third Party Fraud - Provides covers for an insured's financial loss caused by a third party's criminal or fraudulent behaviour.
Client Fraud - Provides cover for financial loss, to the deprivation of a client, caused by an employee's criminal or fraudulent behaviour. Also covers, client money, securities or property while in the care, custody or control of an insured.
Social Engineering Fraud
- Provides cover for financial loss, caused by an act of influencing an employee to divulge sensitive information or perform a task on the fraudsters behalf.
The above sections can be selected to tailor cover to meet your individual requirements. Note individual crime covers are available under some package policies, such as management liability insurance, however cover will typically be limited to employee fraud.
Recently some insurers have sought to combine cover available under a crime insurance policy and a cyber insurance
policy, typically referred to as cyber and crime insurance
Further information please read: How to prevent Cyber Crime? Your weakest business link
What are the recent crime statistics?
The 2018 National Crime Agency (NCA)
report have identified 4,600 serious and organised crime groups in the U.K, costing the economy £37bn a year. Whereas, PWCs 2018 Global Economic Crime Survey
of UK companies identified:
The costs are further increased by the burden of investigating and remediating, not to mention the impact on reputation, brand, employee morale and relationships with business partners.
What are the recent crime claim trends?
Over the last few years technology has accelerated the frequency and severity of crime claims. In what we refer to as cyber crime, there have been two major causes:
> Employee Theft.
EYs - The outlook for fraud and corruption offers an insight into how the evolution and impact of digital technology creates opportunities for fraudulent behaviour.
To compare crime insurance quotes from the wholesale market, please complete our online application
for cyber and crime insurance
What is social engineering fraud?
Social engineering fraud
is the act of influencing a person to divulge sensitive information or to perform a task, which results in a voluntary payment to the fraudster. Please refer to our guide that offers a more detailed insight into the exposure.
UK Finance (FFA UK) has put together specific advice with the backing of Her Majesty’s Government to raise awareness about social engineering fraud in a national campaign called Take Five to Stop Fraud.
Why do employees steal?
Most employees who defraud their employers are long-standing trusted employees with no criminal history. The fraud triangle developed by Dr Donald Cressy helps to explain: why employees steal from their employers?
It is never practically possible for any business to completely remove the risk of employee theft. However, the company culture, internal controls and a consistent response to a theft, can play a significant part in deterring an employee from committing an act of fraud.
Cyber insurance vs crime insurance?
A cyber crime can potentially be covered under both crime insurance and cyber insurance, however each provides cover in different ways:
However, some insurers have more recently sought to combine the two covers under one policy. Your decision to purchase specific covers will impact which products available best meet your requirements.
How can cyber crime business fraud be prevented?
All companies and industries will face their own challenges to prevent dishonesty and business fraud, below is a list of common practices that promote good risk management:
Centralised systems and controls
Dedicated IT personnel
Dedicated internal audit function
Segregation of duties for banking functions
Dual signatories for authorising payments
Independent wage check against personnel records
Whistle blowing policy
ActionFraud offers advice to guard against the risk of theft. In addition to offering an online reporting tool. The National Fraud Intelligence Bureau sits alongside Action Fraud within the City of London Police which is the national policing lead for fraud.
How do insurers underwrite crime insurance policies?
Insurers are confronted with a number of challenges in attempting to accurately price your insurance. For example, the diversity of exposures from different business activities, increasing sophistication of criminals and frequency of loss data.
Below are key considerations when insurers review your individual risk:
The size and scope of an applicant's activities and territorial exposure measured by turnover, employee numbers and total assets.
The quality of controls to mitigate potential exposures:
Are employee duties segregated, so no one employee can control any transaction from start to finish?
Do you maintain a dual authorisation procedure for transferring funds?
When recruiting for positions of trust involving money or stock, do you undertake background checks?
Frequency and severity of claims, in addition to any remedial action for any historic losses (even if there wasn't insurance available).
What industries are more prone to business fraud?
Any company can become the victim of business fraud, however the following industries have been shown to attract more claims:
PI insurance vs crime insurance
There is an argument, that if an insured has been found to be negligent, the loss of property, money or securities on behalf of a client may be covered under their professional indemnity insurance
However, this argument makes assumptions concerning the circumstances surrounding the loss and the ability to prove negligence.
It is worth considering that PI insurance
was not designed to cover specific cyber crime incidents, therefore under certain circumstances it can prove difficult to claim under the policy.
In addition, it is worth considering that a PI insurance claim will typically cost your organisation more over the longer term, rather than making a claim under a crime policy.
What is a losses discovered policy?
Crime insurance policies operate on a losses discovered basis. Which means the current policy will respond to claims once the loss has been identified and notified to the insurer.
If you discover a crime has occurred during the policy period, it is important to notify the insurer of those circumstances immediately.
How to compare quotes for cyber and crime insurance?
To compare cyber and crime insurance quotes from a range of wholesale insurers, please complete our online application. Our digital onboarding process has been designed with our customers in mind, recording material information to promote competition between insurers.
At get indemnity we have seen limited competition within the insurance market for large companies. However, small to medium sized companies with the ability to demonstrate sufficient controls will be able to negotiate favourable terms.
If your business is perceived as carrying a high hazard exposure or you have recent claims activity, you should engage with your crime insurance broker early in the renewal process.
This guide is for information purposes and based on sources which we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.