Need To Know: Major Changes to the ISO Commercial Crime Program

Overview of the Program

There are 14 coverage and policy forms in the ISO commercial crime program. In addition, there are more than 100 endorsements that can be used to tailor the coverage and policy forms to better meet the needs of individual insureds.

ISO Crime Program Forms

Commercial Crime Forms

Commercial Crime Coverage Form (Discovery Form) (CR 00 20)—for use in a package policy
Commercial Crime Coverage Form (Loss Sustained Form) (CR 00 21)—for use in a package policy
Commercial Crime Policy (Discovery Form) (CR 00 22)—monoline crime policy
Commercial Crime Policy (Loss Sustained Form) (CR 00 23)—monoline crime policy

Government Crime Forms

Government Crime Coverage Form (Discovery Form) (CR 00 24)—for use in a package policy
Government Crime Coverage Form (Loss Sustained Form) (CR 00 25)—for use in a package policy
Government Crime Policy (Discovery Form) (CR 00 26)—monoline crime policy
Government Crime Policy (Loss Sustained Form) (CR 00 27)—monoline crime policy

Commercial Fidelity and Forgery Forms

Commercial Fidelity and Forgery Policy (Discovery Form) (CR 00 28)—monoline crime policy
Commercial Fidelity and Forgery Policy (Loss Sustained Form) (CR 00 29)—monoline crime policy

Government Fidelity and Forgery Forms

Government Fidelity and Forgery Policy (Discovery Form) (CR 00 30)—monoline crime policy
Government Fidelity and Forgery Policy (Loss Sustained Form) (CR 00 31)—monoline crime policy

Kidnap/Ransom and Extortion Forms

Kidnap/Ransom and Extortion Coverage Form (CR 00 40)—for use in a package policy
Kidnap/Ransom and Extortion Policy (CR 00 41)—monoline crime policy

Key Changes in the 2022 Editions

Extensive changes were made to the language and organization of all the ISO commercial crime forms with a June 2022 edition date. In some cases, the changes to the language resulted in changes in coverage. In other cases, the changes in language were made primarily because of the reorganization of the forms and for consistency with language used in other ISO program forms.

Probably the most visible change is the renaming and restructuring of what used to be called the "Employee Theft" agreement. This was retitled as the "Fidelity" insuring agreement and broken down into three separate coverages.

Employee theft (as in prior editions)
Employee Retirement Income Security Act of 1974 (ERISA) plan official dishonesty (previously included within the employee theft coverage)
Employee theft of clients' property (previously available by endorsement)

This restructuring is more significant than it may at first appear. Many—perhaps most—insureds that purchase commercial crime coverage do so in order to purchase employee theft coverage, and most of these rely on that coverage to meet their bonding obligations under ERISA. Under the revised forms, it is necessary to elect the ERISA plan official dishonesty coverage in addition to the employee theft coverage to comply with federal law regarding the handling of funds of employee welfare or benefit plans that are subject to ERISA. Under the prior editions, the ERISA plan official dishonesty coverage was simply included in the employee theft coverage.

Another major change is the addition of a new optional fraudulent impersonation insuring agreement to the coverage forms, replacing the fraudulent impersonation endorsement used with the 2015 editions. The coverage provided by the fraudulent impersonation insuring agreement is similar but not identical to the coverage provided by the fraudulent impersonation endorsement.

Perhaps the most important change overall is to the crime coverage trigger. In the 2022 editions, the insuring agreements grant coverage for loss from an occurrence discovered by a "designated person," instead of simply by "you" as in prior editions. The definition of a designated person in the commercial forms is an insurance risk manager; a partner, member, manager, director, or trustee; an officer; the highest-ranking employee at the premises where that employee performs most of their duties; or an administrator, manager, etc. of an insured employee benefit plan. The definition in the government forms is similar but does not include the highest-ranking employee at a premises and refers to officials instead of the insured's partners, etc.

There are many other differences between the 2022 editions and their predecessors—some consequential in terms of coverage and others less so. One observation is that the restructuring in the 2022 editions can make it challenging even for those who are fairly familiar with commercial crime coverage to find particular provisions, since so many of them were relocated and rearranged. For example, the previously separate conditions pertaining to cancellation or termination of coverage, which is a particularly critical issue for employee theft coverage, now appear as a single multipart provision applicable to all insuring agreements.

Conclusion

In the latest round of changes to the ISO commercial crime program, the revisions were extensive. The major coverage and policy forms were restructured, and the language was revised throughout. It is important for insurance professionals to familiarize themselves with the current edition forms and endorsements so that they can use them effectively to meet the needs of the organizations that they serve.

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The key provisions of all the forms and endorsements in the ISO commercial crime program are addressed in detail in IRMI's Commercial Property Insurance reference service. Subscribers can use these links to access their information.