Insurance Marketplace Realities 2022 Spring Update – Fidelity/crime

Rate predictions: Fidelity/crime

	Trend	Range
Fidelity/crime		Flat to +7.5%

Key takeaway

Crime insurers are clinging to the hard market wave and are looking to capture rate increases where possible. All insurers are feeling the impact of social engineering losses, which are driving high frequency of low dollar value claims.

Crime underwriters remain focused on two areas.

• Social engineering
  • Social engineering coverage remains largely sublimited, yet some underwriters have expressed their intent to narrow coverage further.
  • Social engineering deductibles are increasing to match overall policy deductibles.
  • Higher limits or sublimits are only available on those accounts with best-in-class policies and procedures.
  • Buyers will find limited appetite in the market to extend social engineering coverage to include loss of “other property.”
  • Both commercial and financial institution (FI) insurers are adding belts and suspenders language to ensure that social engineering losses will not be covered outside of the explicit social engineering fraud insuring agreement.
• Cyber
  • Insurers are clarifying or eliminating previously afforded crime coverages that may be duplicative with cyber (e.g., extortion and destruction of data).
  • Several insurers are adding exclusionary language intended to clarify that the crime policy will not respond to cyber-related exposures, namely extortion/ransomware payments.

All eyes are on cryptocurrency.

• The specie market only provides coverage for cold storage, which is the physical loss or damage to keys and codes if they are physically held and stored in a secure location.
• We see limited appetite among U.S., U.K. and Bermuda insurers to write crime coverage for crypto risks. Some insurers will consider writing established companies, with a preference for those who are acting in a service provider capacity (i.e., custodians) and who can afford meaningful deductibles.
• Some insurers are starting to apply cryptocurrency-related exclusions to crime policies, even if there is little or no exposure.