At O. Brokers we recommend fraud insurance, also known as crime insurance, to all our clients. It covers the loss a company suffers as a direct result of a criminal act, such as a scam, fraud or misappropriation, committed by an employee or a third party. We recommend it as a complement to cyber insurance, to provide full fraud cover.
What is fraud insurance or crime insurance?
It is a policy that covers the loss suffered by the insured company as a direct result of a criminal act. The insured loss may be of property, money or securities.
With the growing threat of technological fraud, adequate protection is essential. That is why we recommend it as a complement to a cyber and crime insurance policy.
When is fraud insurance triggered?
A crime policy is triggered by identity theft, fraudulent manipulation of the company’s systems involving a transfer of funds, or internal fraud, that is, fraud committed by an employee, that causes a loss.
What types of fraud does fraud insurance cover?
The types of fraud that have grown most in recent years are known as external technological fraud. Fraud insurance covers the losses arising from all of these situations:
| Type of fraud | How it happens |
|---|---|
| Impersonation (social engineering fraud or fraudulent instruction) | Someone impersonates a person, by email or by phone, to request a payment to a fraudulent account. They may pose as a supplier or as the CEO and instruct someone in the finance department to make a transfer. |
| Funds transfer fraud | Someone impersonates the company before a financial institution or intercepts the communication between the bank and the company (“man in the middle”). |
| Online price manipulation | Someone breaches the company’s systems, accesses the ERP or the website and changes the prices of the products on sale. |
| Fraud in contracted services | Someone steals the credentials of an online service, such as cloud servers, and runs up excessive usage at the company’s expense. |
| Internal fraud | An employee commits a crime against the company, such as a scam or misappropriation, that causes a loss. |
How do cyber insurance and fraud insurance fit together?
Cyber insurance protects organisations against external cyber attacks and covers third-party claims arising from these incidents. It includes incident management services, first-party damage, liability and technological fraud.
Crime insurance complements it to provide full fraud cover: it covers the direct loss of property, money or securities caused by a criminal act, including when it is committed by an employee. That is why we recommend that all our clients take out fraud insurance in addition to a cyber insurance policy.
Could it happen to any company? The Ferrari case
A well-known case is the impersonation of Ferrari’s CEO. A manager at the company received a phone call asking him to make a transfer for a “big acquisition” the company was planning.
A deepfake tool imitated the CEO’s voice perfectly. Only one question from the manager (“What is the title of the book you recommended I read?”) stopped the scam.
Why does artificial intelligence increase the risk of fraud?
With the arrival of artificial intelligence, social engineering fraud is becoming more common and harder to detect. There are tools available to anyone that can imitate your voice and even your face in a Teams meeting.
AI tools such as ChatGPT can write emails in any language, imitating the usual way two people communicate with each other.
How does O. Brokers handle fraud insurance?
To obtain fraud insurance, a company needs to put in place a series of procedures to minimise the risk as far as possible. We support our clients in implementing the security measures and processes that insurers require to provide cover.
Depending on the business activity, turnover and geographical spread, we advise on the cover, limits and sub-limits to take out. At each renewal we review all policies to make sure they have the best cover available.
Frequently asked questions about fraud insurance
1. What does crime insurance cover?
It covers the loss the company suffers as a direct result of a criminal act. The insured loss may be of property, money or securities.
2. Does fraud insurance cover fraud by an employee?
Yes. It covers losses arising from an intentional crime, such as a scam, misappropriation or fraud, committed by an employee or a third party.
3. Does it cover CEO fraud?
Yes. Impersonation, for example when someone poses as the CEO to request a transfer, is one of the situations that trigger a crime policy.
4. Why take out fraud insurance if I already have cyber insurance?
Because crime insurance complements cyber insurance to provide full fraud cover. That is why at O. Brokers we recommend it to all our clients together with a cyber insurance policy.
5. What is needed to take out fraud insurance?
A series of procedures to minimise the risk. At O. Brokers we support our clients in implementing the security measures and processes that insurers require.
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How O. Brokers can help At O. Brokers we help you review your procedures and obtain the right cover for your company. Contact our team of experts: info@obrokers.es | +34 935 95 56 23 |
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