Commercial Crime ISO Rules. ISO Properties, Inc

Transcription

1 Commercial Crime ISO Rules ISO Properties, Inc ADDITIONAL RULE(S) A1. TRANSITION RULE FOR PREMIUM CHANGES RESULTING FROM REVISED RATING PROCEDURES FOR CRIME AND FIDELITY COVERAGES A. This transition rule applies to policies being renewed with the same carrier. It is to be used in the determination of premiums for: 1. The first, second and third renewals of policies written on an annual basis. 2. The first, second and third years for policies written on a prepaid term basis. B. For policies written on an annual basis: 1. The company premium for the first annual renewal shall be not more than 25% higher or 25% lower than the company premium which applied at the last anniversary date. 2. The company premium for the second annual renewal shall be not more than 25% higher or 25% lower than the company premium developed under Paragraph B The company premium for the third annual renewal shall be not more than 25% higher or 25% lower than the company premium developed under Paragraph B.2. C. For policies written on a prepaid term basis: 1. Develop an annual company premium for each of the years of the prepaid term, limiting the change for each year to not more than 25% higher or 25% lower than the prior year, then 2. Sum the annual company premiums to determine the total prepaid premium for the selected policy term. D. The percentages shown in Paragraphs B. and C. of Rule A1. apply in addition to any rate level change implemented by the company in accordance with state regulatory procedures. Thus, for example, if a rate level change of +10% (1.10) applies, the percentages shown in this transition rule are modified by the rate level change (1.10 x 1.25 = and 1.10 x.75 =.825). E. Premium changes produced by the following are not subject to the capping procedure provided in Paragraphs B. and C. of Rule A1.: 1. Changes in limits of insurance. 2. Changes in deductibles. 3. Addition or deletion of optional coverages (insuring agreements or endorsements). 4. Changes in loss experience. 5. Under Paragraph B., increase or decrease in the number of employees or premises. 6. Under Paragraph C., increase or decrease in the number of employees or premises due to addition or deletion of joint insureds; or merger, consolidation or purchase of assets or liabilities of another institution. A2. TERRORISM OPTIONS - FEDERAL BACKSTOP Refer to the Terrorism Supplement to the CLM. RULES (EXCEPTIONS)

2 SECTION I - GENERAL RULES 1. APPLICATION OF THIS DIVISION A. Contents Division Three contains the rules, ISO advisory prospective loss costs and/or individual company rates, rating procedures and state exceptions for the: 1. Commercial Crime Coverage Form (This coverage form is available for use with the Commercial Package Policy.) 2. Commercial Crime Policy 3. Government Crime Coverage Form (This coverage form is available for use with the Commercial Package Policy.) 4. Government Crime Policy 5. Employee Theft And Forgery Policy 6. Government Employee Theft And Forgery Policy 7. Kidnap/Ransom And Extortion Coverage Form (This coverage form is available for use with the Commercial Package Policy.) 8. Kidnap/Ransom And Extortion Policy B. Sections This division is divided into separate sections for: 1. Section I - General Rules Policy 2. Section II - Commercial Crime Coverage Form And Commercial Crime Policy 3. Section III - Government Crime Coverage Form And Government Crime Policy 4. Section IV - Employee Theft And Forgery Policy 5. Section V - Government Employee Theft And Forgery Policy 6. Section VI - Kidnap/Ransom And Extortion Coverage Form And Kidnap/Ransom And Extortion 7. Section VII - Exposure Units 8. Rating Relativities and Factors 9. Classification Table 10. Rating Examples Appendix 11. Multistate Loss Costs 12. Crime and Fidelity Experience and Schedule Rating Plan 13. Kidnap/Ransom and Extortion Individual Risk Premium Modification Plan C. Rule And Loss Costs Exceptions Refer to state exceptions for any exception(s) to the rules or loss costs in this division. D. Statistical Codes For statistical codes, refer to the Crime module of the Commercial Statistical Plan. 2. COMPANY RATES/ISO LOSS COSTS

3 A. Loss Costs All loss costs in Division Three - Crime And Fidelity are annual loss costs. This Division contains either ISO prospective loss costs or individual company rates. A loss cost is that portion of the premium which covers only losses and the costs associated with settling losses. B. Company Rates All rules in this Division are designed to be utilized with rates. All references in the rules and examples to rates and/or premiums (including base premiums) shall be interpreted to mean those established by the individual insurance company. C. Loss Cost Conversion Each insurance company must provide manualholders with either its own rates or with procedures to convert ISO prospective loss costs to rates and/or premiums. If an insurer provides its own rates, use them in place of the ISO prospective loss costs in this Manual. If an insurer does not provide its own rates, manualholders must convert the ISO prospective loss costs in this Manual to rates and/or premiums before applying any of the rules. Refer to the company for specific instructions - including rounding procedures - on how to do this. 3. REFERRALS TO COMPANY Rule 3. is replaced by the following: Refer to company for: A. Any applicable rating plan modification. B. Rating or classifying any risk or exposure for which there is no manual loss cost or applicable classification. Rates shall not be inadequate, excessive or unfairly discriminatory. (For other refer to company situations, see Rule 10. ) Companies should maintain complete files, including all details of the factors used in determining the rate or classification for a particular risk. When a risk is rated on a refer to company basis, each company is responsible for complying with regulatory requirements. 3. REFERRALS TO COMPANY Refer to company for: A. Any applicable rating plan modification. B. Rating or classifying any risk or exposure for which there is no manual loss cost or applicable classification. Rates shall not be inadequate, excessive or unfairly discriminatory. (For other refer to company situations, refer to Rule 10.) Companies should maintain complete files, including all details of the factors used in determining the rate or classification for a particular risk and make these files available to state regulators on request. Such rates or classifications need not be filed with the state regulator. However, this shall not apply when a company has developed or prepared a manual or schedule of rates which includes a classification applicable to a risk being written. To the extent that filing requirements apply to such a manual or schedule of rates, they must be followed. 4. EFFECTIVE DATE The date shown on the bottom of the Manual page is a printing date and not necessarily the effective date. Effective dates are announced on the Notices to Manualholders. 5. POLICY TERM A policy may be written:

4 A. On a continuous basis; B. For a one or three year period. However, for government entities only, the period may also be two or four years; or C. For a period of less than one year. 6. PREMIUM PAYMENT PERIOD A. Prepaid Policies The premium payment period may be: 1. One Year Compute the company premium using the annual rates in effect at policy inception. 2. Three Years, And For Government Entities Only, Also Two Or Four Years Compute the company premium using the annual rates in effect at policy inception multiplied by the appropriate factor shown in Table 6.A.2.(RF). 3. Less Than One Year Compute the company premium for a policy written with a policy period or premium period of less than one year by multiplying the pro rata annual premium by the factor shown in Table 6.A.3.(RF). However, this factor is not applied if the insurance is written to: a. Establish a common expiration date with other coverages or lines of insurance; or b. Expire with the original full term insurance. Charge the above premium for each separate period of exposure. B. Installment Payments Multiply the annual company premium by the factor shown in Table 6.B.(RF). The result is the installment premium to be charged each year of the policy period or premium period. 7. FACTORS OR MULTIPLIERS Factors or multipliers are to be applied consecutively and not added together unless otherwise specified. 8. ROUNDING PROCEDURE Round to the nearest whole dollar the premium for each separate coverage; for example, $ = $ For return premiums only, refer to Rule 11.C POLICY WRITING MINIMUM PREMIUM Refer to the multistate loss costs: A. For prepaid policies, apply the policy writing minimum premium regardless of policy period or premium period. B. For annual premium payment plan policies or continuous policies, apply the policy writing minimum premium for each annual policy period or premium period.

5 10. INDIVIDUAL RISK SITUATIONS Paragraph B. is replaced by the following: B. File Maintenance When a particular risk is modified in accordance with Paragraph A., companies should maintain a complete file, including all details of the factors used in determining the modification. Each company is responsible for complying with regulatory requirements. Note Rates shall not be inadequate, excessive or unfairly discriminatory. 10. INDIVIDUAL RISK SITUATIONS A. Refer To Company 1. Rating Or Classifying Refer to the company for rating or classifying any risk or exposure for which: a. The manual rate or applicable classification is clearly demonstrated to be inappropriate because of a unique or unusual feature of the risk; Note To the extent that consent-to-rate procedures apply, they must be followed. b. The coverage to be written is broader than that contained in the applicable coverage form or policy; Note To the extent that forms filing requirements apply, they must be followed. c. There is proof that, for a specific coverage, the named risk is qualified in this state for placement of such insurance with an authorized insurer, and the insured agrees to the proposed rate or premium to be charged; or d. The risk develops $100,000 or more annual manual basic limit premium individually or in any combination with Commercial Automobile or General Liability. 2. Restriction Of Coverage Refer to the company if a coverage form or policy providing the insurance contemplated by an applicable classification and rate is endorsed to restrict coverage for hazards not common to all risks within the class. Note To the extent that forms filing requirements apply, they must be followed. B. File Maintenance When a particular risk is modified in accordance with Paragraph A., companies should maintain a complete file, including all details of the factors used in determining the modification and make the file available to state regulators on request. Such modifications need not be filed with the state regulator. Note Rates shall not be inadequate, excessive or unfairly discriminatory. 11. PREMIUM CHANGES Paragraph B.3. is replaced by the following: B. Additional Premiums 3. Where the policy inception premium was less than the policy writing minimum premium, add the additional premium to the policy inception premium as the total premium for the policy. If the total premium is still below the policy minimum premium, charge the policy writing minimum premium instead. Paragraph C.5. is replaced by the following: C. Return Premiums 5. Retention Of Policy Writing Minimum Premium Do not retain the policy writing minimum premium:

6 a. When the return premium is calculated under Rule 11.C.1.a: b. When the policy is cancelled as of the inception date; c. When the return premium is calculated under Rule 11.C.1.b., unless an exception has been sought under the provision of Florida Regulations Section (2) by means of a prior approval filing for certain classes or types of risk as set forth in such filing. Refer to the insurer for information on exception, if any, in effect for that insurer. 11. PREMIUM CHANGES A. Rate Or Rating Factor Changes Midterm premium changes are not to be made because of midterm changes in rates or rating factors unless, as respects the latter, there is a significant change in the number of employees, insured persons or premises because of: 1. Addition or deletion of a joint insured. 2. Merger, consolidation or purchase or acquisition of assets or liabilities of another entity. 3. Seasonal or part-time operations. B. Additional Premiums 1. Apply the rates and rules in effect on the effective date of the policy or, if the change is made after an anniversary date of the policy, apply the rates and rules in effect on that anniversary date. 2. Prorate additional premium charges. 3. Additional premium charges are in addition to any policy writing minimum premium or other minimum premium already charged. 4. Waive additional premium as shown in the Multistate Loss Costs. This waiver applies only to the portion of the premium due on the effective date of the policy change. C. Return Premiums 1. Policy Or Coverage Part Cancellation Or Deletion Of An Insuring Agreement Or Coverage a. Pro Rata Calculations Compute return premium pro rata of the charged premium when the cancellation or deletion is: (1) At the company's request. (2) Because the insured no longer has a financial or insurable interest in the property or business operation that is the subject of insurance. (3) Because coverage is to be rewritten in the same company or a company group. (4) After the first year of a prepaid policy written for a term of more than one year. b. Other Than Pro Rata Calculation If pro rata calculation does not apply, compute return premium as follows: (1) Prepaid Policies (a) One Year Or Less Compute the return premium by multiplying the pro rata unearned premium for the one year by the factor shown in Table 11.C.1.b.(1)(a)(RF) and rounding to the next whole dollar. (b) Two Or More Years If cancelled during the first year, compute the return premium by multiplying the pro rata unearned premium for the first full year by the factor shown in Table 11.C.1.b.(1)(b)(RF), then adding the full annual premium for subsequent years and rounding to the next whole dollar. (2) Installment Payments Compute the return premium by multiplying the pro rata unearned premium for the year in which the policy is cancelled by the factor shown in Table 11.C.1.b.(2)(RF) and rounding to the next whole dollar. 2. Other Than Policy Or Coverage Part Cancellation Or Deletion Of An Insuring Agreement Or Coverage Compute return premium pro rata of the charged premium.

7 3. Rounding Of Premium Round the premium to the next higher whole dollar when any coverage is cancelled, deleted or a limit of insurance is reduced. 4. Waiver Of Premium Waive return premium as shown in the Multistate Loss Costs. Grant any return premium due if requested by the insured. The waiver only applies to cash exchange due on the endorsement effective date. 5. Retention Of Policywriting Minimum Premium Retain the policy writing minimum premium when return premium is calculated under Paragraph 1.b., except when a policy is cancelled as of the inception date. 12. FORMS PORTFOLIO REFERENCE Refer to the Forms Portfolio for information on: A. Sample forms; and B. Applicability and edition dates of forms in each state. 13. BASIC FORMS AND ENDORSEMENTS APPLICABLE Paragraph A.3. does not apply. Paragraphs C.2. and C.3. do not apply. Paragraph D.2. does not apply. Paragraphs F.1. and F.2. do not apply. The following is added to Rule 13.: G. State Amendatory Endorsements the: 1. Attach Florida Changes - Cancellation And Nonrenewal Endorsement IL to a. Commercial Crime Coverage Form; b. Government Crime Coverage Form; and c. Kidnap/Ransom And Extortion Coverage Form. 2. Attach Florida Policy Changes Endorsement IL to the: a. Commercial Crime Coverage Form; b. Government Crime Coverage Form; and c. Kidnap/Ransom And Extortion Coverage Form.

8 3. Attach Florida Changes - Legal Action Against Us Endorsement CR to the: a. Commercial Crime Coverage Form; b. Government Crime Coverage Form; and c. Kidnap/Ransom And Extortion Coverage Form. 4. Attach Florida Changes - Binding Arbitration Endorsement CR to the: a. Commercial Crime Coverage Form; b. Commercial Crime Policy; c. Employee Theft And Forgery Policy; d. Government Crime Coverage Form; e. Government Crime Policy; f. Government Employee Theft And Forgery Policy; g. Kidnap/Ransom And Extortion Coverage Form; and h. Kidnap/Ransom And Extortion Policy; which provides for settling disputes between the insured and company through binding arbitration. There is no premium consideration for this endorsement. 5. Attach Florida Changes - Nonbinding Arbitration Endorsement CR to the: a. Commercial Crime Coverage Form; b. Commercial Crime Policy; c. Employee Theft And Forgery Policy; d. Government Crime Coverage Form; e. Government Crime Policy; f. Government Employee Theft And Forgery Policy; g. Kidnap/Ransom And Extortion Coverage Form; and h. Kidnap/Ransom And Extortion Policy;

9 which provides for settling disputes between the insured and company through nonbinding arbitration. There is no premium consideration for this endorsement. 6. Attach Florida Changes Endorsement CR to the: a. Commercial Crime Policy; b. Employee Theft And Forgery Policy; c. Government Crime Policy; d. Government Employee Theft And Forgery Policy; and e. Kidnap/Ransom And Extortion Policy. 13. BASIC FORMS AND ENDORSEMENTS APPLICABLE A. Crime Coverage Forms The following form and endorsements apply to the Commercial Crime Coverage Form and Government Crime Coverage Form (These coverage forms are available for use with the Commercial Package Policy.): 1. Common Policy Conditions Attach Common Policy Conditions Form IL to the Commercial Crime Coverage Form and Government Crime Coverage Form. 2. Computer-related Losses Use Exclusion Of Certain Computer-related Losses Endorsement IL This endorsement specifies that certain risks associated with computer or other electronic equipment failure, malfunction, inadequacy or inability to correctly recognize, process, distinguish, interpret or accept one or more dates or times are excluded from coverage. There is no premium consideration for this endorsement. 3. Policy Changes Use Policy Changes Endorsement IL to make changes in the Common Policy Declarations IL DS 00.

10 4. Premium Calculation Use Calculation Of Premium Endorsement IL to specify that the policy premium was computed based on rates in effect at the time the policy was issued. Upon renewal, premiums will be based on rates and rules then in effect. B. Crime Policies The following endorsements apply to the Commercial Crime Policy, Government Crime Policy, Employee Theft And Forgery Policy and Government Employee Theft And Forgery Policy (These stand-alone policies are written outside of the Commercial Package Policy.): 1. Computer-related Losses Use Exclusion Of Certain Computer-related Losses Endorsement CR This endorsement specifies that certain risks associated with computer or other electronic equipment failure, malfunction, inadequacy or inability to correctly recognize, process, distinguish, interpret or accept one or more dates or times are excluded from coverage. There is no premium consideration for this endorsement. 2. Premium Calculation Use Calculation Of Premium Endorsement CR to specify that the policy premium was computed based on the rates in effect at the time the policy was issued. Upon renewal, premiums will be based on rates and rules then in effect. C. Crime Coverage Forms And Policies The following endorsements apply to the Commercial Crime Coverage Form, Commercial Crime Policy, Government Crime Coverage Form, Government Crime Policy, Employee Theft And Forgery Policy and Government Employee Theft And Forgery Policy: 1. Aggregate Limit Of Insurance Use Convert To An Aggregate Limit Of Insurance Endorsement CR to provide an aggregate limit of insurance when the coverage form or policy is written for a period of one year or less. The premium is determined by multiplying the company premium for the coverage form or policy by the factor shown in Table 13.C.1.(RF) before applying the provisions of the Crime and Fidelity Experience and Schedule Rating Plan. Should the aggregate limit be exhausted or partially exhausted, it may, upon request of the insured and acceptance by the company, be rewritten or reinstated. Charge a prorated company premium for the remainder of the policy or premium period. 2. Arbitration (Binding)

11 Use Binding Arbitration Endorsement CR to settle disputes between the insured and company through binding arbitration. There is no premium consideration for this endorsement. 3. Arbitration (Nonbinding) Use Nonbinding Arbitration Endorsement CR to settle disputes between the insured and company through non-binding arbitration. There is no premium consideration for this endorsement. 4. Automatic Coverage For Acquired Entities Use Provide Automatic Coverage For Acquired Entities Endorsement CR to provide automatic coverage for entities acquired by the insured in which the insured owns greater than 50% of the voting stock or voting rights. There is no premium consideration for this endorsement. This endorsement does not apply to the Government Crime Coverage Form, the Government Crime Policy or Government Employee Theft And Forgery Policy. 5. Cancellation Notice To Another Entity (Not Required) Use Provide Notice Of Cancellation To Another Entity Endorsement CR to provide notice of cancellation to another entity on a "best efforts" basis. There is no premium consideration for this endorsement. 6. Cancellation Notice To Another Entity (Required) Use Provide Required Notice Of Cancellation To Another Entity Endorsement CR to provide notice of cancellation to another entity as required by statute or regulation. There is no premium consideration for this endorsement. 7. Change In Control Of The Insured - Notice To The Company Use Change In Control Of The Insured - Notice To The Company Endorsement CR to require the insured to provide notice to the company of a change in ownership of voting stock of more than 10%. There is no premium consideration for this endorsement. This endorsement does not apply to the Government Crime Coverage Form, Government Crime Policy or Government Employee Theft And Forgery Policy. 8. Coindemnity Use Coindemnity Endorsement CR to provide insurance on a coindemnity basis. There is no premium consideration for this endorsement. 9. Concurrent Insurance Use Concurrent Insurance Endorsement CR to provide insurance on a concurrent insurance basis:

12 a. Compute the company premium for the limit of insurance being written, equal to the total of each separate limit of insurance of all policies written on a concurrent basis. b. Determine the ratio that each separate limit of insurance bears to the total limit. Apply each ratio to the company premium computed in Paragraph a. The result is the company premium for each policy written on a concurrent basis. c. When coverages are written for different limits, a separate premium computation is made for each such coverage in accordance with Paragraphs a. and b. Allocate the appropriate premium to each of the concurrent policies affording such coverage. 10. Designated Person Required To Have Knowledge Of Loss (Discovery Form) Use Include Designated Person Required To Have Knowledge Of Loss Endorsement (Discovery Form) CR to require certain persons to have knowledge of loss to trigger coverage. There is no premium consideration for this endorsement. 11. Designated Person Required To Have Knowledge Of Loss (Loss Sustained Form) Use Include Designated Person Required To Have Knowledge Of Loss Endorsement (Loss Sustained Form) CR to require certain persons to have knowledge of loss to trigger coverage. There is no premium consideration for this endorsement. 12. Extended Period To Discover Loss (Change) Use Change Extended Period To Discover Loss Endorsement CR to change the 60-day discovery period of a coverage form or policy written on a discovery basis. The premium for the extended discovery period is determined by prorating the annual company premium for the coverage form or policy, based on the length of time of the discovery period being provided. Multiply the result by the factor shown in Table 13.C.11.(RF). 13. Joint Venture Or Partnership Use Include Joint Venture Or Partnership As Insured(s) Endorsement CR to provide coverage on joint ventures or partnerships. Include the employees and premises of the joint venture or partnership in computing the company premium for the coverage form or policy. This endorsement does not apply to the Government Crime Coverage Form, Government Crime Policy or Government Employee Theft And Forgery Policy. 14. Loss Payable Use Loss Payable Endorsement CR to make payment for covered loss to a loss payee. There is no premium consideration for this endorsement. 15. Loss Payable (Joint)

13 Use Joint Loss Payable Endorsement CR to make payment for covered loss to the insured and a loss payee. There is no premium consideration for this endorsement. 16. Loss Reporting Threshold Use Loss Reporting Threshold Endorsement CR to waive the notice of loss requirement if the loss does not exceed the specified percentage of the deductible amount shown in the Declarations. There is no premium consideration for this endorsement. 17. Obligee Use Obligee Endorsement CR to indemnify an obligee for loss covered under the Government Crime Coverage Form, Government Crime Policy or Government Employee Theft And Forgery Policy. There is no premium consideration for this endorsement. 18. Policy Change (Discovery Form) Use Policy Change Endorsement (Discovery Form) CR to make midterm changes to a coverage form or policy written on a discovery basis. Refer to Rule 11. Premium Changes. 19. Policy Change (Loss Sustained Form) Use Policy Change Endorsement (Loss Sustained Form) CR to make midterm changes to a coverage form or policy written on a loss sustained basis. Refer to Rule 11. Premium Changes. 20. Protective Devices Or Services Use Add Protective Devices Or Services Endorsement CR to require the insured to maintain protective devices or services. This endorsement does not apply to the Employee Theft And Forgery Policy or Government Employee Theft And Forgery Policy. Refer to the company for premium consideration. 21. Retroactive Date Use Include Retroactive Date Endorsement CR to provide coverage only for loss occurring in its entirety after the retroactive date when the coverage form or policy is written on a discovery basis. There is no premium consideration for this endorsement. 22. Retroactive Date (Provide Limited Coverage For Loss Occurring Before Retroactive Date) Use Provide Limited Coverage For Loss Occurring Before Retroactive Date Endorsement CR to provide coverage for loss occurring in its entirety after the retroactive date or partly before and partly after the retroactive date when the coverage form or policy is written on a discovery basis. There is no premium consideration for this endorsement.

14 23. Territorial Limits Use Amend Territorial Limits Endorsement CR to add or delete a territory. Refer to company for premium consideration. 24. Varying Deductibles Use Provide Varying Deductibles Endorsement CR Refer to Rule 14.D. D. Kidnap/Ransom And Extortion Coverage Form The following form and endorsements apply to the Kidnap/Ransom And Extortion Coverage Form: 1. Common Policy Conditions Attach Common Policy Conditions Form IL to the Kidnap/Ransom And Extortion Coverage Form. 2. Policy Changes Use Policy Changes Endorsement IL to make changes in the Common Policy Declarations IL DS Premium Calculation Use Calculation Of Premium Endorsement IL to specify that the policy premium was computed based on using the rates in effect at the time the policy was issued. Upon renewal, premiums will be based on rates and rules then in effect. E. Kidnap/Ransom And Extortion Policy The following endorsement applies to the Kidnap/Ransom And Extortion Policy: Use Calculation Of Premium Endorsement CR to specify that the policy premium was computed based on using the rates in effect at the time the policy was issued. Upon renewal, premiums will be based on rates and rules then in effect. F. Kidnap/Ransom And Extortion Coverage Form And Policy The following endorsements apply to the Kidnap/Ransom And Extortion Coverage Form and Kidnap/Ransom And Extortion Policy: 1. Arbitration (Binding)

15 Use Binding Arbitration Endorsement CR to settle disputes between the insured and company through binding arbitration. There is no premium consideration for this endorsement. 2. Arbitration (Nonbinding) Use Nonbinding Arbitration Endorsement CR to settle disputes between the insured and company through non-binding arbitration. There is no premium consideration for this endorsement. 3. Policy Changes Use Policy Change Endorsement CR to make midterm changes to the coverage form or policy. Refer to Rule 11. Premium Changes. 14. DEDUCTIBLES Refer to the premium computation rules for deductible calculation. For coverages to which the deductibles shown in Tables 14.A.(RF), 14.B.(RF) and 14.C.(RF) apply, all base rates contemplate a basic deductible factor of $500. For deductibles less than $1,000, multiply the company rate by the appropriate deductible buy-back factor. The deductible buy-back factors are located in the Rating Relativities and Factors Section of this division. A. Deductibles Less Than $1,000 Refer to Table 14.A.(RF). B. Deductibles From $1,000 To $25,000 Refer to Table 14.B.(RF). C. Deductibles Over $25,000 Refer to Table 14.C.(RF). D. Deductibles In Varying Amounts (Joint Insured Risks) Use Provide Varying Deductibles Endorsement CR When two or more insureds are covered under the same coverage form/policy as joint insureds, deductibles in varying amounts may be applied to different insureds or groups of insureds separately by Insuring Agreement. The company premium is computed in the following manner:

16 1. Separate the insureds into groups which contain common deductible amounts. 2. Compute the company premium for each group using the total of all rating factors of all groups (for example, number of ratable employees and additional premises). 3. Multiply each of the company premiums produced in Paragraph 2. by the ratio that each group's number of ratable employees bears to the total number of ratable employees of all insureds. 4. Add the separate premiums produced in Paragraph 3. The result is the company premium for the respective Insuring Agreement(s) to which varying deductibles apply. 15. INTERPOLATION Unless stated otherwise, interpolation of exposure units (and where applicable, minimum premiums or rates) for intermediate limits of insurance is permitted: A. Determine the exposure units, premium or rate for the limit of insurance immediately above the intermediate limit. B. Determine the exposure units, premium or rate for the limit of insurance immediately below the intermediate limit. C. Subtract the result determined in Paragraph B. from the result determined in Paragraph A. and prorate the difference. D. Add the result determined in Paragraph C. to the result determined in Paragraph B. to produce the exposure units, premium or rate for the intermediate limit of insurance. 16. APPLICATION OF THE CRIME AND FIDELITY EXPERIENCE AND SCHEDULE RATING PLAN The Crime and Fidelity Experience and Schedule Rating Plan may be applied to the company premiums for the Crime and Fidelity coverage forms and policies rated in Division Three.

17 17. APPLICATION OF THE KIDNAP/RANSOM AND EXTORTION INDIVIDUAL RISK PREMIUM MODIFICATION PLAN The Kidnap/Ransom And Extortion Individual Risk Premium Modification Plan may be applied to the company premiums for the Kidnap/Ransom And Extortion Coverage Form and Policy rated in Division Three. 18. DESCRIPTION OF THE CRIME AND FIDELITY COVERAGE PART AND POLICIES A. The Crime and Fidelity Coverage Part of the Commercial Package Policy is comprised of: 1. The Commercial Crime Coverage Form, Government Crime Coverage Form and/or Kidnap/Ransom And Extortion Coverage Form; 2. Common Policy Conditions; and 3. Declarations. B. Crime and Fidelity policies are written on a stand-alone basis outside the Commercial Package Policy and consist of the Commercial Crime Policy, Government Crime Policy, Employee Theft And Forgery Policy, Government Employee Theft And Forgery Policy and Kidnap/Ransom And Extortion Policy. C. Amendatory endorsements (including those for use in a particular jurisdiction) are available for both the Crime and Fidelity Coverage Part and stand-alone Crime and Fidelity policies RESERVED FOR FUTURE USE

18 SECTION II - COMMERCIAL CRIME COVERAGE FORM AND COMMERCIAL CRIME POLICY 25. COMMERCIAL CRIME COVERAGE FORM AND COMMERCIAL CRIME POLICY - ELIGIBILITY A. First Named Insureds 1. Any insured except an insured eligible for the: a. Government Crime Coverage Form, Government Crime Policy, and Government Employee Theft And Forgery Policy; or b. Financial institution bonds or policies. 2. However, the following, even though eligible for a financial institution bond or policy, are eligible for the Commercial Crime Coverage Form and Commercial Crime Policy: a. Endowment funds; b. Foundations; and c. Mutual funds having nonemployee sales representatives. B. Individual Insuring Agreement Exceptions 1. The Securities Deposited With Others Insuring Agreement CR may be written for any insured. 2. The Guests' Property Insuring Agreement CR may only be written for insureds providing lodging facilities. 3. The Safe Depository Insuring Agreement CR may only be written for insureds (other than financial institutions) providing safe deposit box facilities. C. Joint Insureds 1. Conditions Eligible entities may be included as joint insureds if one or more of the following conditions apply:

19 a. Stock Ownership More than 50% of the capital stock of an eligible entity is owned by another eligible entity. b. Voting Control In the absence of stock ownership, as described in Paragraph a., an independent investigation clearly shows that one eligible entity directs the affairs of another eligible entity through voting control. c. Holding Companies Eligible holding companies own as in Paragraph a., control as in Paragraph b. or operate as in Paragraph d. their eligible subsidiaries and affiliates. It is permissible to include as joint insureds two or more such owned, controlled or operated subsidiary and affiliated entities with the holding company or without the holding company if it is ineligible. d. Operation By Contract The direction of an eligible entity's affairs has been transferred to another eligible entity by lease or contract. The operated entity may be included as a joint insured with the operating entity. e. Individuals Eligible entities are owned as in Paragraph a., controlled as in Paragraph b. or operated as in Paragraph d. by the same individual. However, when coverage is written for a corporation, it is not permissible to include any non-owning, non-controlling or non-operating individual, such as an officer of the corporation. f. Trustees Eligible entities are operated by one or more common trustees. The trustees and entities may be included as joint insureds. However, it is not permissible to include any entity performing services for the trustees. g. Other Conditions There are instances other than those described in Paragraphs a. through f. which justify the inclusion of affiliated entities as joint insureds. The following factors should be considered in determining eligibility: (1) A large degree of ownership or control by a central interest. (2) The existence of common officers. (3) The occupation of common premises.

20 (4) The intermingling of employees of different entities. 2. Specific Or Automatic Inclusion Of Joint Insureds Joint insureds may be added to the coverage form or policy by showing after the name of the first named insured: a. The specific name of each joint insured; or b. Language such as "and any interest hereafter owned, controlled or operated by any one or more of those named as insureds" provided, however, that written notice is given within 90 days thereafter and an additional premium is paid, if required. If the Declarations Form is amended after policy issuance, use Policy Change Endorsement (Discovery Form) CR or Policy Change Endorsement (Loss Sustained Form) CR COMMERCIAL CRIME COVERAGE FORM AND COMMERCIAL CRIME POLICY - DESCRIPTION OF COVERAGE A. Coverage Form And Policy Available The following versions of the coverage form and policy are available for commercial entities: 1. Commercial Crime Coverage Form (Discovery Form) CR Commercial Crime Coverage Form (Loss Sustained Form) CR Commercial Crime Policy (Discovery Form) CR Commercial Crime Policy (Loss Sustained Form) CR B. Discovery And Loss Sustained Forms Of Coverage 1. Discovery Form Indemnifies the named insured for losses sustained at any time and discovered during the policy period or discovered during the extended period to discover loss. 2. Loss Sustained Indemnifies the named insured for losses that are sustained and discovered during the policy period or discovered during the extended period to discover loss. C. Insuring Agreements Available

21 Any combination of insuring agreements shown in Table 26.C. A separate limit of insurance and deductible can be written on each insuring agreement. Insuring Agreement Title 1. Employee Theft (Blanket) 2. Forgery Or Alteration 3. Inside The Premises - Theft Of Money And Securities Property Covered All Checks Drawn by Insured Money and Securities 4. Inside The Premises - Robbery Or Safe Burglary Of Other Property 5. Outside The Premises Property other than Money and Securities All 6. Computer Fraud All 7. Funds Transfer Money and Securities Fraud 8. Money Orders And Money Counterfeit Money Table 26.C. Insuring Agreements Contained In The Coverage Form And Policy D. Insuring Agreements Available By Endorsement Any combination of insuring agreements shown in Table 26.D. Insuring Agreement Property Covered Title 1. Clients' Property All 2. Destruction Of Money paid to restore Electronic Data Or Electronic Data or Computer Programs Computer Programs

22 3. Unauthorized Reproduction Of Computer Software By Employees 4. Extortion - Commercial Entities Money paid in fines and penalties All 5. Inside The Premises - Theft Of Other Property 6. Inside The Premises - Robbery Of A Watchperson Or Burglary Of Other Property 7. Inside The Premises - Robbery Of A Custodian Or Safe Burglary Of Money and Securities 8. Employee Theft - Name Or Position Schedule 9. Lessees Of Safe Deposit Boxes 10. Securities Deposited With Others 11 Guests' Property. 12 Safe Depository. 13 Identity Fraud. Expense 14 Telephone Toll. Fraud Property other than Money and Securities Property other than Money and Securities Money and Securities All Securities Securities Guests' Property Customers' Property Money Money Table 26.D. Insuring Agreements Available By Endorsement 27. COMMERCIAL CRIME COVERAGE FORM AND COMMERCIAL CRIME POLICY - EMPLOYEE THEFT INSURING AGREEMENT A. Employee Theft Insuring Agreement

23 This insuring agreement covers loss of or damage to money, securities and other property resulting directly from theft committed by an employee, whether identified or not, acting alone or in collusion with other persons. B. Premium Development 1. Rating Data a. Based on the predominant activity of the insured, determine the applicable Class Code. Refer to the Classification Table Section of this division. b. Using the Class Code, determine the company rate for the insured. Refer to Supplemental Table #1(LC) in the Multistate Loss Costs Section of this division. c. Determine the number of ratable employees. Ratable employees consist of: (1) All officers; (2) All employees (including persons or entities construed to be employees by endorsement, other than agents, partners and members of a limited liability company) who handle, have custody of or maintain records of money, securities or other property; (3) All directors, trustees, officers, employees, administrators and managers (other than independent contractors) not included in Paragraph (1) or (2), who handle funds or other property of employee benefit plans subject to the Employee Retirement Income Security Act (ERISA); (4) All leased employees and former employees hired as consultants not included in Paragraphs (1) through (3); and (5) One percent of all others not included in Paragraphs (1) through (4). Round to the nearest whole person; for example, 2.5 = 3. d. Determine the number of additional premises (other than the head office). 2. Premium Computation a. Select the limit of insurance to be written. If a deductible applies, add the deductible amount to the limit selected to produce the total limit of insurance used in rating. b. Refer to Rule 113. Exposure Units Table - Blanket Coverage. Based on the total limit of insurance determined in Paragraph a. compute the: and (1) Exposure units for the number of ratable employees determined in Paragraph 1.c.;

24 (2) Exposure units for the number of additional premises determined in Paragraph 1.d. The exposure units for the additional premises are subject to modification in accordance with Table 27.B.2.b.(2). Number Of Additional Premises Percentage Of Exposure Units To Be Charged Each of the first % Each of the next 25 25% Each of the next 50 5% Each Over 100 No Charge Table 27.B.2.b.(2) Exposure Units Charge For Additional Premises c. Add the exposure units for the ratable employees and additional premises computed in Paragraph b. d. If a deductible applies, using the procedures in Paragraph b., compute the exposure units for the deductible amount for the number of ratable employees and additional premises. Add the exposure units for the ratable employees and additional premises and multiply the result by the factor shown in Table 27.B.2.d.(RF). e. Subtract the deductible amount exposure units produced in Paragraph d. from the exposure units produced in Paragraph c. Multiply the result by the company rate determined in Paragraph 1.b. The result is the company premium for the Employee Theft Insuring Agreement. C. Coverage Amendments 1. General Use a. Agents (1) Use Include Designated Agents As Employees Endorsement CR Treat each covered agent (including any partners, members, officers and employees of the agent) as an employee. Based on the predominant activity of each covered agent, determine the applicable company rate. Refer to Supplemental Table #1(LC) in the Multistate Loss Costs Section of this division. (2) Select the limit of insurance to be written on each covered agent. Add to this limit the deductible amount applicable to the Employee Theft Insuring Agreement to produce the total limit of insurance used in rating.

25 (3) Separate the agents into groups according to their predominant activity and written at the same limit of insurance. Refer to Rule 114. Exposure Units Table - Schedule Coverage. The premium is calculated separately for each group of agents: (a) For the first five agents in the group, using Part I. Exposure Units For Each Of The First Five Or Less Employees: (i) Compute the exposure units for the total limit of insurance determined in Paragraph (2). (ii) Compute the exposure units for the deductible amount applicable to the Employee Theft Insuring Agreement and multiply the result by the factor shown in Table 27.C.1.a.(3)(a)(ii)(RF). (iii) Subtract the exposure units computed in Paragraph (ii) from the exposure units computed in Paragraph (i). Multiply the result by the number of agents in the group. (b) If there are more than five agents in the group, using Part II. Exposure Units For Each Employee Over Five, compute the exposure units using the procedures in Paragraph (a). (c) Add the exposure units produced in Paragraphs (a) and (b) and multiply the result by the company rate for the agents determined in Paragraph (1) and then by the factor shown in Table 27.C.1.a.(3)(c)(RF). (4) Add the separate premiums developed in Paragraph (3) for each group of agents to produce the company premium. (5) If the insured is a fraternal order or labor union and Faithful Performance Of Duty Coverage is being written, the additional charge for such coverage does not apply to this endorsement. (6) Use the Agents Endorsement to provide coverage on nonemployees handling funds or other property of employee benefit plan(s). Treat each covered nonemployee as an employee and compute the company premium using the procedures in Paragraphs (1) through (4). b. Banks For Cooperatives And Federal Intermediate Credit Banks Use Banks For Cooperatives And Federal Intermediate Credit Banks Endorsement CR to make payment for a covered loss to the bank. There is no premium consideration for this endorsement. c. Computer Software Contractors (1) Use Include Computer Software Contractors As Employees Endorsement CR Treat each covered computer software contractor (including any partners, members, officers

26 and employees of the contractor) as an employee. Determine the company rate for the computer software contractor. Refer to Supplemental Table #1(LC) in the Multistate Loss Costs Section of this division. (2) Select the limit of insurance to be written on each covered computer software contractor. Add to this limit the deductible amount applicable to the Employee Theft Insuring Agreement to produce the total limit of insurance used in rating. (3) Separate the computer software contractors into groups written at the same limit of insurance. Refer to Rule 114. Exposure Units Table - Schedule Coverage. The premium is calculated separately for each group of computer software contractors: (a) For the first five computer software contractors in the group, using Part I. Exposure Units For Each Of The First Five Employees: (i) Compute the exposure units for the total limit of insurance determined in Paragraph (2). (ii) Compute the exposure units for the deductible amount applicable to the Employee Theft Insuring Agreement and multiply the result by the factor shown in Table 27.C.1.c.(3)(a)(ii)(RF). (iii) Subtract the exposure units computed in Paragraph (ii) from the exposure units computed in Paragraph (i). Multiply the result by the number of computer software contractors in the group. (b) If there are more than five computer software contractors in the group, using Part II. Exposure Units For Each Employee Over Five, compute the exposure units using the procedures in Paragraph (a). (c) Add the exposure units produced in Paragraphs (a) and (b) and multiply the result by the company rate for the computer software contractors determined in Paragraph (1) and then by the factor shown in Table 27.C.1.c.(3)(c)(RF). (4) Add the separate premiums developed in Paragraph (3) for each group of computer software contractors to produce the company premium. d. Employees (Exclude) Use Exclude Designated Persons Or Classes Of Persons As Employees Endorsement CR Do not charge for excluded persons. e. Employees (Include) Use Include Designated Persons Or Classes Of Persons As Employees Endorsement CR Treat each covered person as an additional ratable employee.

27 f. ERISA Inflation Guard Use ERISA Inflation Guard Endorsement CR Multiply the company premium determined in Paragraph B.2. by the factor shown in Table 27.C.1.f.(RF). The result is the company premium. g. Excess Limit Of Insurance For Specified Employees Or Positions Use Add Schedule Excess Limit Of Insurance For Specified Employees Or Positions Endorsement CR (1) Select the specific excess limit of insurance to be written on each scheduled employee or position. Add to this limit the primary limit of insurance (for example, the Employee Theft Insuring Agreement limit and deductible amount) to produce the total limit of insurance used in rating. (2) Separate the employees into groups containing common limits of specific excess insurance. Refer to Rule 114. Exposure Units Table - Schedule Coverage. The premium is calculated separately for each group of employees: (a) For the first five employees in the group, using Part I. Exposure Units For Each Of The First Five Employees: (i) Compute the exposure units for the total limit of insurance determined in Paragraph (1). (ii) Compute the exposure units for the primary limit (for example, Employee Theft Insuring Agreement limit and deductible amount). (iii) Subtract the exposure units computed in Paragraph (ii) from the exposure units computed in Paragraph (i). Multiply the result by the number of employees in the group. (b) If there are more than five employees in the group, using Part II. Exposure Units For Each Employee Over Five, compute the exposure units using the procedures in Paragraph (a). (c) Add the exposure units produced in Paragraphs (a) and (b) for each group of employees and multiply the result by the company rate for the insured. (3) Add the separate premiums developed in Paragraph (2). The result is the company premium. (4) If excess Faithful Performance Of Duty Coverage is being written for a fraternal order or labor union, multiply the company rate for the insured by the factor shown in Table 27.C.1.g.(4)(RF).

28 (5) Excess Employee Theft insurance also is available for agents and nonemployees who are covered under the primary limit of insurance. The company premium is computed separately using the procedures in Paragraphs (1) through (3). h. Excess Limit Of Insurance For Specified Joint Insured Use Add Blanket Excess Limit Of Insurance For Specified Joint Insured Endorsement CR (1) Select the excess limit of insurance to be written on the specified joint insured. Add to this limit the primary limit of insurance (for example, the Employee Theft Insuring Agreement limit and deductible amount) to produce the total limit of insurance used in rating. (2) Based on the number of ratable employees and premises of the joint insured: (a) Compute the exposure units for the total limit of insurance determined in Paragraph (1). (b) Compute the exposure units for the primary limit (for example, the Employee Theft Insuring Agreement limit and deductible amount). (c) Subtract the exposure units computed in Paragraph (b) from the exposure units computed in Paragraph (a). (3) Multiply the result produced in Paragraph (2) by the company rate for the insured (not the joint insured) to produce the company premium. i. Expenses Incurred To Establish Amount Of Covered Loss Use Include Expenses Incurred To Establish Amount Of Covered Loss Endorsement CR Using the procedures in Paragraph B., compute the exposure units for the limit of insurance being written, based on the number of ratable employees, additional premises and deductible amount applicable to the Employee Theft Insuring Agreement. Multiply the result by the company rate for the insured and then by the factor shown in Table 27.C.1.i.(RF) to produce the company premium. j. Members Of A Limited Liability Company Use Include Members Of A Limited Liability Company As Employees Endorsement CR Treat each covered member as a ratable employee. Using the procedures in Paragraph B., compute the exposure units for the limit of insurance and deductible amount applicable to the Employee Theft Insuring Agreement, for the number of members to be rated (do not include the insured's premises). Multiply the result by the company rate for the insured to produce the company premium. Prorate the company premium for less than five members. k. Noncompensated Officers