Crime and fidelity insurance
Cover for financial losses caused by fraud, theft or embezzlement committed by employees or third parties.
Crime and fidelity insurance, the heir of fidelity bonds, pays a company back the money taken from it dishonestly: embezzlement by an employee, theft, forgery, fraud, payment-transfer fraud. It is distinct from cyber insurance, even though the two increasingly overlap as fraud becomes digital. CEO fraud and fake-supplier fraud, which combine social engineering and financial diversion, sit precisely at this boundary, raising qualification questions between crime cover and cyber cover. For the underwriter, the central issue is the quality of the insured's internal controls: segregation of duties, payment validation procedures, audits, which determine the frequency and severity of the risk. The rise of AI-assisted fraud, synthetic voice and video, increases the sophistication of attacks and complicates prevention.
Textbook case: a company hit by a fraudulent transfer triggered by impersonation of its director can be indemnified under its crime cover, subject to how the loss is qualified.
crime insurance, fidelity bond, commercial crime, employee dishonesty cover
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