Insurance Marketplace Realities 2023 Spring Update – Fidelity/crime

Rate predictions: Fidelity/crime

	Trend	Range
Fidelity/crime		Flat to +2.5%

While commercial and financial institution crime losses are trending differently, the frequency of external theft and fraud has surpassed internal theft and fraud for both classes of business.

• For commercial risks, internal theft and fraud continue to be more costly, often because the perpetrators have inside knowledge on how to avoid detection or bypass certain controls.
• For financial institutions, external theft and fraud leads the way in terms of both frequency and severity. These include losses where securities fraud has been detected, commonly in the form of mortgage or loan fraud.

Social engineering is a crime of particular concern for any business.

• Whether through falsification of suppliers’ invoices, clients’ payment instructions or impersonation of executives, social engineering losses have increased significantly in recent years.
• For commercial risks, social engineering claims are leading the way in terms of loss frequency. Although the average cost remains benign, the cumulative cost of these loss events is sizable.
• For financial institution risks, social engineering losses have generally not materialized in a meaningful way.

The average financial institution crime loss is $2.9 million, while the average commercial crime loss is $1.02 million.

• For both commercial crime and financial institution crime, there is an inverse relationship between claim frequency and claim severity, meaning, most claims are settled for under $500,000 while ~5% percentage of claims exceed $5 million in cost.
• The median size crime loss for both commercial and financial institution risks hover at ~$170,000; however, that isn’t to say that we don’t see crime losses with significant scale. The largest single commercial crime loss is $55 million, while the largest single financial institution crime loss is $961 million.

Types of commercial crime loss

Types of FI crime loss

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 entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Contacts

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Matt Klein

National Fidelity Product Leader

email Email phone +1 212 309 5515

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Colleen Kutner

U.S. Fidelity Thought Leader, FINEX North America

email Email phone +1 303 765 1546

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