Need A Social Engineering Fraud Endorsement? Here’s What You Need To Know

Crime insurance is a product you almost never hear discussed — at least not to the same degree as auto insurance, life insurance, or homeowners insurance. But some customers may wish to know a bit more about it as well as some of the special forms that it can take. Recently on reddit, an individual asked the r/Insurance community whether there was coverage against being scammed. While many policies will have exclusions against things like “theft by trickery,” there are some options worth noting.

Today, we’ll focus on one — the social engineering fraud endorsement.

Chubb Insurance is one of the companies that offers this coverage, and here are some vital facts about when you need it and what it covers.

 

Social engineering fraud: what is it?

The term “social engineering fraud” is defined as the act of “deceptively gaining confidence of an employee to induce him or her to part with money or securities,” Chubb notes, adding that a fraud scheme by someone who is posing as a trusted vendor, new client or employee “may cost a company hundreds of thousands of dollars — or more.”

Even worse, it may not matter what protections a business has in place — vendor background screenings, fraud detection systems, financial duty segregation, and employee education programs, to name a few — that business may still be vulnerable.

 

A social engineering fraud endorsement added to Chubb’s ForeFront Portfolio 3.0 Crime Insurance policy might be needed for the following reasons:

  • Frauds of confidence and deception can be difficult to detect and may result in losses of $10k or more to cyber criminals before the company even realizes it. “Your company might find it difficult to absorb such a financial impact without feeling dramatic, even devastating effects,” the company adds.
  • Social engineering fraud and scams are increasingly common.
  • Your company can be victimized by anyone — even a trusted vendor can be the victim of a hacker who poses as the vendor, redirecting your next payment.
  • Smaller companies often are more vulnerable to fraud because they may lack financial or wire transfer controls that larger companies may routinely employ.

 

Through Chubb’s social engineering fraud endorsement, the following coverages are offered:

  • Loss due to vendor or supplier impersonation.
  • Loss due to executive impersonation.
  • Loss due to client impersonation.

 

It also offers these additional advantages.

  • Full carve back to the voluntary parting exclusion.
  • Broad all-risk language wherein loss does not have to occur through use of computer, email or phone.
  • Streamlined supplemental application.
  • No requirement for vendors and suppliers to carry crime or fidelity insurance to trigger coverage.
  • Coverage is available up to $250,000 per occurrence, with no annual aggregate, though higher limits can be considered with additional underwriting.

While the Chubb endorsement described above specifically targets social engineering fraud, it’s likely not exclusive to the company. As an agent who is looking for ways to expand his business beyond auto/home/life and think outside the box, you should consider researching what your company has to offer when it comes to insurance loss by scam.

 

In Summary

With cyber and other threats picking up more steam and doing heavier damage at a single moment, it can be terrifying for business owners and individuals to live their lives without the proper protections in place. Consider putting together a list of your current customers, who might benefit from the peace of mind that such an endorsement can provide. Also, if you are a member of your local chamber of commerce, discuss this option with some of the small business owners with whom you brush shoulders. It may not be your biggest revenue stream moving forward, but it could definitely be worth adding to your portfolio of products.

Share this Article
Facebooktwittergoogle_pluslinkedinmail
Farmers - The Hartford - State Farm - Kemper Direct - Nationwide - Allstate - New York Life