Thieves look for access to vulnerable property. What could be better than convincing someone to give it away? The key is making the transaction look legitimate by impersonating someone the victim trusts for receiving instructions to transfer money. In these masquerading scams, the hacker might use social media to discover personal information that could be used to convince the victim an email or other authorization is coming from a genuine source, such as a company executive or chief vendor. Coverage for this kind of trickery fraud has not previously been offered in the Insurance Services Office Inc. crime forms. However, there is an insuring agreement for “computer fraud,” in which the insured’s computer is used by someone to fraudulently transfer property from the insured’s premises or banking premises to a location outside those premises. There also is an insuring agreement for “funds transfer fraud,” in which the insured’s bank receives fraudulent instructions to transfer the insured’s money or securities.
Effective Nov. 1, 2015, the Insurance Services Office Inc. introduced a new Fraudulent Impersonation CR 04 17 11 15 endorsement for use with its commercial and government crime forms in Connecticut. The endorsement adds an insuring agreement for Fraudulent Impersonation that covers transfer instructions purportedly issued by one or both of the following: 1. an “employee,” partners, “members,” “managers,” officers, directors, trustees or the sole proprietor; or 2. your “customer” or “vendor” who proves to be an imposter. Coverage will be contingent upon the verification requirement selected, which includes: a. all transfer instructions must be verified; b. all transfer instructions over a dollar amount must be verified; or c. no-transfer instruction must be verified. Obviously, the rate will vary with the selection made.
In the same filing, ISO introduced an exclusion in the commercial and government crime forms for virtual currency, such as bitcoins. However, a new Include Virtual Currency As Money CR 25 45 11 15 endorsement offers the option to cover virtual currency under one or both insuring agreements for Employee Theft and Computer and Funds Transfer Fraud. The value for this currency shall be determined by the rate of exchange published by the Exchange shown in the Schedule on the close of business on the day the loss was discovered. According to the International Business Times, “the number of retailers accepting the cryptocurrency bitcoin has passed 100,000.” Merchants realize a lower expense when bitcoins are used for payment. Not only is the transaction charge lower than credit cards, but the purchaser pays the charge. Producers are challenged to help clients tailor their insurance portfolio to keep up with financial and technological developments.—source PIA/Dan Corbin
If you are interested in learning more, please contact Tim Russell CPCU at 203.255.2877.