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As we have noted in the past the Insurance Services Office (ISO), the organization that drafts standard policy forms used by much of the property and liability insurance industry, revises its forms periodically. ISO introduced some changes to standard crime policy forms in November, 2015.
We talked last issue about social engineering fraud losses, where employees were induced to transfer funds to bad guys employing ruses or impersonating a person in authority. Insurance companies have been denying those claims since they did not fall within the scope of coverage in crime policies up to that point. ISO has now introduced a new Fraudulent Impersonation Endorsement, which covers losses resulting from an employee being deceived by an imposter into transferring money, securities, or other property. It comes in two flavors, Fraudulent Impersonation of Employees and Fraudulent Impersonation of Customers and Vendors. In both cases, an option for verifying transfer instructions must be included on the endorsement. Verification can be required for all transfer instructions or only for transfer instructions in excess of the amount shown on the schedule. There is also an option that does not require verification of transfer instructions.
This is a worthwhile coverage enhancement, and cost for it should be modest. It does need to be tailored a bit; give us a call and we’ll sit down and review this important coverage with you to make sure all your bases are covered.