Laws and Regulations for Commercial Crime Insurance

Protect your company by staying informed about laws and regulations of commercial crime insurance

Staying abreast of laws and regulations for commercial crime insurance can help you protect your company’s assets. A commercial crime insurance policy reimburses businesses for losses associated with theft, vandalism and other criminal acts associated with employee dishonesty, including the current hot topic in crime insurance -- the Terrorism Risk Insurance Act which deals with acts of terrorism. No matter the size of your business, you could be affected by commercial crime including acts of terrorism. Even mid-sized companies that lack internal controls often fall victim to commercial crime.

Some losses caused by business crime may not be covered by a commercial crime insurance policy, so it’s important for you as a business owner to understand how commercial crime insurance laws and regulations affect your coverage. To help you ensure you’re adequately covered and within your legal rights, you should:

1. Familiarize yourself with the Insurance Services Office (ISO) model forms and polices your state utilizes in regulating commercial insurance
2. Understand the legal requirements about commercial crime insurance set forth by ERISA, the law that covers employee retirement plans, to protect against people stealing retirement funds.
3. Stay up-to-date with changes in laws and regulations on commercial crime insurance by remaining current with news from the National Association of Insurance Commissioners and the Surety and Fidelity Association of America.

 

Use ISO forms and policies to ensure compliance to commercial crime insurance laws and regulations

Commercial crime insurance is regulated by the states which generally use the model forms and policies provided by the Insurance Services Office (ISO). Making a habit of using these forms in your business will help you ensure your business's compliance with state laws and regulations on commercial crime insurance. The standardized format of the ISO's forms help businesses by simplifying the claim settlement process and help business owners reduce costs of lengthy or involved litigation. Rely on forms and policies from the ISO to ensure compliance to commercial crime insurance laws and regulations.
Try: The Insurance Services Office provides an explanation of their policy language and the rules they follow when providing policy forms for both personal and commercial use. The language and formats used in these forms, including those for crime and fidelity insurance coverage, make it easy to understand and use for even the least insurance-saavy business owner. IRMI.com  provides additional information that risk management professionals will find helpful in watching for and catching commercial crime, including white-collar criminal acts that could be carried out by your own employees or non-employees. The article also discusses exactly company property or resources can be stolen and covered by this type of insurance.

Understand the legal requirements about commercial crime insurance set forth by ERISA

The Employee Retirement Income Security Act (ERISA) is a Federal statute passed in1974 and establishing minimum pension plan standards for private industry that covers employee retirement plans and involves specific legal requirements about commercial crime insurance to protect against employees stealing retirement funds or utilizing them in ways other than those intended by Federal regulations. Following ERISA regulations will help your business remain compliant when it come to commercial criminal insurance.
Try: The Hartford’s website explains in detail about fidelity/commercial crime insurance and ERISA Fidelity bonding requirements. Companies like The Hartford will offer its business customers automatic asset protection up to $1 million. CNA also offers coverage via Third Party ERISA which reimburses clients with plans covered for loss or fraud by a trustee, employee, bank/business officer, administrators, managers and contractors.

Stay abreast of changes in laws and regulations on commercial crime insurance

To make certain you are up-to-date on all law and regulation changes effecting commercial crime insurance, you'll need to keep up with key entities such as the National Association of Insurance Commissioners (NAIC) and the Surety and Fidelity Association of America (SFAA).
Try: The NAIC holds regular conferences and maintains committees, activities and offices handling government relations and securities valuations. The NAIC website offers a wide variety of the most current information pertaining to insurance regulation. The SFAA provides regular updates of state and federal advocacy from both a regulatory and legislative standpoint.

 

• When determining how much commercial crime insurance you may need, it's important to consider the physical value of your business assets, the number of employees who have access to proprietary business information, the likelihood of your employees participating in dishonest activities and the effectiveness of internal controls you currently have in place to prevent employee theft and dishonesty.

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