ISO COMMERCIAL CRIME COVERAGES RATING CONSIDERATIONS

(January 2026)

INTRODUCTION

This rating analysis addresses the following coverages contained in the Insurance Services Office (ISO) Commercial Crime Coverage Forms and Policies.

· Fidelity (Replaces Employee Theft with 06 22 edition)

· Forgery or Alteration

· Inside the Premises–Theft of Money and Securities

· Inside the Premises–Robbery or Safe Burglary of Other Property

· Outside the Premises

· Computer and Funds Transfer Fraud

· Fraudulent Impersonation

· Money Orders and Counterfeit Money

· Kidnap/Ransom and Extortion Forms:

o Kidnap/Ransom and Extortion–Direct Loss

o Kidnap/Ransom and Extortion–Expenses Incurred

o Detention or Hijack

o In-transit Delivery of Property

The main elements of the rating process are the chosen insurance limits and the exposure basis. While challenging, the named insured must decide on the insurance limit according to what they believe is their highest possible loss exposure.

Developing this information requires the named insured to analyze its financial records, record keeping, inventory controls, and the coverage requested. There is no coinsurance penalty for underinsurance; the only consequence is that the insured’s loss will not be fully covered if the limit is insufficient.

There is a specific method to determine the correct exposure basis for each coverage. However, most Commercial Crime Insuring Agreement formulas are based on the Employee Theft formula, while all Kidnap/Ransom and Extortion Insuring Agreement formulas are derived from the Kidnap/Ransom and Extortion-Direct Loss formula.

EXPOSURE BASIS

Employee Theft

1. Ratable employees consisting of the following:

· officers

· employees who handle money, securities, or other property

· persons who handle employee benefits plans

· leased employees

· former employees hired as consultants

· one percent (1%) of all other employees

2. The number of premises.

Forgery or Alteration

1. Ratable employees consisting of the following:

· officers

· employees who handle money, securities, or other property

· persons who handle employee benefits plans

· leased employees

· former employees hired as consultants

· one percent (1%) of all other employees

2. The number of premises.

Inside the Premises–Theft of Money and Securities

The number of premises.

Inside the Premises–Robbery or Safe Burglary of Other Property

The number of premises.

Outside the Premises

The number of premises.

Computer and Funds Transfer Fraud

1. Ratable employees consisting of the following:

· officers

Employee Theft

1. Select the limit of insurance.

2. If a deductible applies, add it to the limit of insurance to develop the limit of insurance to be used in computing the premium.

3. In Rule 113 – Exposure Units Table – Blanket Coverage, select the exposure units based on the limit of insurance and the number of ratable employees or persons.

4. In Rule 113 – Exposure Units Table – Blanket Coverage, select the premises exposure units based on the limit of insurance.

5. Multiply the exposure units by the number of premises.

· If there are more than 25 premises, multiply the next 25 premises by the exposure unit and then by .25.

· If there are more than 50 premises, multiply the next 50 premises by .05.

· There is no charge for additional premises over 100.

· Add the charges for the first 25, plus the next 25, plus the next 50 to develop the additional premises exposure units.

6. Add Step 3 and Step 5 together.

If a deductible applies, follow Steps 7 through 12. If not, skip to step 13.

In Rule 113 – Exposure Units Table – Blanket Coverage, select the exposure units based on the deductible limit of insurance and the number of ratable employees.
In Rule 113 – Exposure Units Table – Blanket Coverage, select the premises exposure units based on the deductible limit of insurance.
Multiply the exposure units by the number of premises.

· If there are more than 25, multiply the next 25 premises by the exposure unit and then by .25.

· If there are more than 50 premises, multiply the next 50 premises by .05.

· There is no charge for additional premises over 100.

· Add the charge for the first 25 plus the next 25 plus the next 50 to develop the additional premises exposure unit.

Add Step 7 and Step 9 together.
Multiply Step 10 by the deductible credit factor.
Subtract Step 11 from Step 6 to develop the net exposure units.

13. Determine the class code based on the named insured’s primary activity.

14. Select the loss cost in the supplemental tables based on the class code.

15. Multiply the loss cost by the insurance company’s loss cost multiplier to develop a rate.

16. Multiply Step 14 by Step 12.

17. Apply experience and schedule rating if eligible and where warranted.

Forgery or Alteration

If Employee Theft and Forgery or Alteration are written with the same limit of insurance and the same deductible, multiply the premium developed in the Employee Theft formula above by the Forgery or Alteration Factor.

If the limits are not the same, follow the steps above for the applicable limits and deductible, and then multiply by the Forgery or Alteration Factor.

Inside the Premises–Theft of Money and Securities

1. Determine the class code from the Classification Tables section based on the insured’s primary activity.

2. Determine the premium factor by navigating to the Rating Relativities and Factors section, then locating the Supplemental Tables — Commercial Crime and Government Crimes section. In the Supplemental Tables, find the premium factor by using Rule 31 based on the class code.

3. If Employee Theft and Inside the Premises – Theft of Money and Securities are written with the same limit of insurance and the same deductible, multiply the premium developed in the Employee Theft formula above by Step 2—premium factor.

4. If the limits are not the same, follow the Employee Theft steps above for the applicable limits and deductible, and then multiply by Step 2—premium factor.

Inside the Premises–Robbery or Safe Burglary of Other Property

1. Determine the class code based on the named insured’s primary activity.

3. If Employee Theft and Inside the Premises – Robbery or Safe Burglary or Other Property are written with the same limit of insurance and the same deductible, multiply the premium developed in the Employee Theft formula above by Step 2—premium factor.

4. If the limits are not the same, follow the Employee Theft steps above for the applicable limits and deductible, and then multiply by Step 2—premium factor.

Outside the Premises

1. Determine the class code based on the named insured’s primary activity.

3. If Employee Theft and Outside the Premises are written with the same limit of insurance and the same deductible, multiply the premium developed in the Employee Theft formula above by Step 2—premium factor.

4. If the limits are not the same, follow the Employee Theft steps above for the applicable limits and deductible and then multiply by Step 2—premium factor.

Computer and Funds Transfer Fraud

If Employee Theft and Computer and Funds Transfer Fraud are written with the same limit of insurance and the same deductible, multiply the premium developed in the Employee Theft formula above by the Computer and Funds Transfer Fraud Factor.

If the limits are not the same, follow the Employee Theft formula above for the applicable limits and deductible, and then multiply by the Computer and Funds Transfer Fraud Factor.

Money Orders and Counterfeit Money

Select the limit of insurance.
Multiply the loss cost by the insurance company’s loss cost multiplier to develop a rate.
Multiply the rate by the limit of insurance per $1,000.
Apply the appropriate deductible factor, if any.
Apply experience and schedule rating if eligible and where warranted.

Kidnap/Ransom and Extortion–Direct Loss

1. Select the limit of insurance.

2. If a deductible applies, add the deductible to the limit of insurance to develop the limit of insurance to be used in computing the premium.

3. In Rule 113 – Exposure Units Table – Blanket Coverage, select the exposure units based on the limit of insurance and the number of ratable employees.

4. In Rule 113 – Exposure Units Table – Blanket Coverage, select the premises exposure units based on the limit of insurance.

5. Multiply the exposure units by the number of premises.

· Multiply by .25 for the first 10 premises.

· If there are more than 10 premises, multiply the next 10 premises by the exposure unit and then by .05.

· There is no charge for additional premises over 20.

· Add the charges for the first 10 plus the next 10 to develop the additional premises exposure units.

6. Add Step 3 and Step 5 together.

If a deductible applies, follow Steps 7 through 12. If no deducible skip to step 13.

7. In Rule 113 – Exposure Units Table – Blanket Coverage, select the exposure units based on the deductible limit of insurance and the number of ratable employees.

8. In Rule 113 – Exposure Units Table – Blanket Coverage, select the premises exposure units based on the deductible limit of insurance.

9. Multiply the exposure units by the number of premises.

· Multiply by .25 for the first 10 premises.

· If there are more than 10 premises, multiply the next 10 premises by the exposure unit and then by .05.

· There is no charge for additional premises over 20.

· Add the charges for the first 10 plus the next 10 to develop the additional premises exposure units.

10. Subtract Step 9 from Step 6.

11. Multiply Step 10 by the deductible credit factor.

12. Subtract Step 11 from Step 6 to develop the net exposure units.

13. Determine the class code based on the named insured’s primary activity.

14. Select the loss cost in the multistate loss costs section based on the class code.

15. Multiply the loss cost by the insurance company’s loss cost multiplier to develop a rate.

16. Multiply Step 14 by Step 12.

17. Apply IRPM schedule rating if eligible and where warranted.

Kidnap/Ransom and Extortion–Expenses Incurred

1. Follow the steps in the Kidnap/Ransom and Extortion – Direct Loss above, but skip all deductible steps because this insuring agreement is not eligible for a deductible.

2. Multiply Step 1 by the Kidnap/Ransom and Extortion–Expenses factor.

3. Apply IRPM rating if eligible and where warranted.

Kidnap/Ransom–Detention or Hijack

1. Follow the steps in the Kidnap/Ransom and Extortion – Direct Loss above, but skip all deductible steps because this insuring agreement is not eligible for deductible.

2. Multiply Step 1 by the Kidnap/Ransom and Extortion–Detention or Hijack factor.

3. Apply IRPM rating if eligible and where warranted.

Kidnap/Ransom–In-transit Delivery of Property

1. Follow the steps in the Kidnap/Ransom and Extortion – Direct Loss above.

2. Multiply Step 1 by the Kidnap/Ransom and Extortion–Expenses factor.

3. Apply IRPM rating if eligible and where warranted.

CRIME AND FIDELITY EXPERIENCE AND SCHEDULE RATING PLAN

The Crime and Fidelity Experience and Schedule Rating Plan is an optional supplemental rating plan developed by ISO for insurance companies to recognize differences in individual risks.

The experience rating portion of the plan uses the named insured's loss experience to determine credits or debits. The schedule rating part of the plan uses risk characteristics that experience rating does not recognize or consider when developing credits or debits. The exposure size will determine eligibility.

A higher threshold applies to experience rating than to schedule rating because the credibility required for experience rating requires more exposure units. These plans vary both by state and insurance company. As a result, it is important to be aware of the approach a specific company takes when applying these plans.

KIDNAP/RANSOM AND EXTORTION INDIVIDUAL RISK PREMIUM MODIFICATION PLAN

The Kidnap/Ransom and Extortion coverage form and policy are not subject to the Crime and Fidelity Experience and Schedule Rating plan. Instead, they have their own individual risk premium modification plan, which is capped at plus or minus 25% in many states, replacing those plans. Experience rating cannot be used with this coverage form or policy.