Embezzlement, fraud and theft are a persistent threat to companies, and the transition to teleworking during the COVID-19 pandemic has increased these risks, experts say.
Cyber-related crime is increasing when fraudsters use social technology to exploit systems and procedures that are made more vulnerable through teleworking, they say.
"The opportunity has never been greater for employees to resort to fraud and / or for fraud based on trying to deceive the company through various attacks, whether it be fraudulent attacks or hacking of their computer systems," said Christopher Arehart, Chicago-based senior vice president. President, Product Manager for Criminal Insurance, Financial Lines in Chubb North America.
The shift to working from home has fundamentally changed the way companies work and "some of the changes that are temporary now will become permanent over time," increasing the risk faced by policyholders, Arehart said.
Business e-compromise is a growing area of risk for criminal insurers, says Reid Eanes, Los Angeles-based senior vice president and chief financial officer at Lockton Cos. LLC.
"There has been an increase in exposure and claims," Mr. Eanes sa.
E-mail compromises for companies are a form of social technology fraud in which the attacker pretends to be a CEO or CEO who is authorized to carry out bank transfers and persuade employees to transfer money to a fake customer account.
Although figures for 2020 are not yet available, 23,235 business compromise complaints resulted in $ 1
“In recent years, it has been a popular system among criminals. This is an area that criminal insurers are very focused on when it comes to guarantee, as well as limited handling and deductibility, ”says Eanes.
Companies want to add coverage for related exposures through their commercial criminal insurance policies, experts say. .
Brokers are asking for higher limits for social engineering coverage, says Bill Jennings, focus group management offense, at Beazley PLC in New York.
"With additional warranty, additional questions and if we can be comfortable with checks that our insured has, we can provide additional limits such as $ 1 million or maybe $ 5 million," says Jennings.
The price of social technology coverage varies depending at risk and limit, but usually a criminal policy can be added for an extra premium of 25-50%, he said.
Agents and policyholders often struggle to find sufficient capacity for socio-technical coverage because it usually has a sublimity, he says. Mike Henning, Chicago-based Executive Line Broker at Risk Placement Services Inc., Wholesale Brokerage and Management Unit for Arthur Agency J. Gallagher & Co.
"If you have a $ 1 million criminal policy, social technology is usually limited to $ 100,000 or $ 250,000, or maybe $ 500,000, for the loss of social technology can be very large, "he said.
The typical crime loss is like" die d with a thousand cuts ", he said. Two to three fraudulent transactions within a month can easily give up to six figures, says Henning.
Social technology fraud is usually offered at a lower limit than the overall policy, but it depends on the individual characteristics of a risk, says Arehart.
Social technology fraud is often due to the failure of a process. and if an employee has tried to call or verify with their boss that a bank transfer is legitimate, he said (see story).
There are many variants of social technology scams, from phishing to ransomware, says Steve Dimakos, Chicago-based CEO of BDO USA LLP. "The difficulty with these crimes is that companies cannot understand the extent of the damage they can cause."
When you hear about the alleged amounts of social media attacks "and you think of a criminal policy, you begin to understand the difficulty of placement and the cost of this type of coverage," he says.
A growing number of commercial crimes come from companies that started in the last five years and want fraud on crime and social technology, says Melissa Schwartz, Product Manager – Commercial Crime at AmTrust Exec, a division of New York-based AmTrust Financial Services Inc.
"I've seen a lot of posts for payment service providers coming in," Schwartz said.
"It seems like everyone wants to create their own app for payment service providers," she said. Some well-known providers of digital payments include Zelle, Stripe and PayPal.
With so many fraud vulnerabilities during the pandemic, these types of accounts can raise warranty issues from a cyber, social technology and data theft standpoint, she said. "I do not usually write these, but I have seen an increase in these types of accounts," Schwartz said.