A Closer Look at Fraud - Bank Card Insurance

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Bank Card Protector Policy

Frates Insurance & Risk Management

By Thomas P Mulligan

405-290-5609

Tom.mulligan@fratesinsurance.com

THE PROBLEM

Identity theft and fraud is becoming so potentially profitable; it is increasing almost as fast as card use.

Facts

Recent Large Data Breaches:

Heartland Payment

BJ’s Warehouse

Hancock Fabrics

A major research firm, is estimating that Bank Card fraud may hit $3 billion in 2011.

Over 3 Million Americans were victims of Bank Card fraud over the last year.

42% of bank customers have had their identity stolen in the last ten years.

According to Visa, 87% of merchants are not computer compliant with the Anti-Fraud

Technology.

Card Skimmers are using Restaurants, Pay at the pump gas stations and ATMs.

As more banks have losses they will improve their security systems. They always have and they will again.

However, it is not possible to prevent every security breach or fraud.

THE SOLUTION

Implement new procedures and systems to prevent/mitigate fraud

And

buy the Bank Card Protector Policy.

The Bank Card Protector Policy

The Policy has 3 Insuring Agreements

1.

2.

3.

FRAUD AT AN ELECTRONIC TERMINAL

FRAUD INVOLVING TELEPHONE, MAIL ORDER AND INTERNET

COMPROMISED CARDS EXTRA EXPENSE

Policy Features

Coverage includes

1. Lost, stolen or counterfeit card including unauthorized use of card number

2. Fraud on the Internet using Verified by

Visa/Master Secure Code

3. Costs to reissue compromised cards

Bank Card

Application

International

Transactions

Verified by Visa

Or MasterSecure

Regulation E

Potential

Loss

Situations

Overdraft

Phishing

“White Card” or Internet

Transactions

Off-Line

Transactions

All of these situations would be covered by the Bank Card Protector Policy. In addition the deductible is a per card deductible of $1,500 vs. most competitors $5,000 or higher.

Extra Expenses

When a Bank Card has been compromised, the extra expense to reissue a new card is covered. However, the bank must cancel the compromised card upon receipt of notification.

Summary of the Bank Card Policy

Benefits to Lenders

1. Worldwide Coverage

2. Extra expense to reissue compromised cards is covered

3. Maximum loss per card is $10,000

4. Low deductible- $1,500 per card

5. Skimming Fraud (White Card) covered

6. Insurer is A+ rated

Program Structure

This is a stand alone policy and will not be effected by losses in the Financial Institution Bond.

Limits and Deductibles structured for the Bankcard industry.

An easy to complete Application.

Program Deductibles

A $1,500 Per Card Deductible Maximum per occurrence deductible $10,000.

Higher deductibles are available for reduced premium.

Normal Policy Limits

Normal Policy Limits

$10,000 per card limit

$100,000 per occurrence limit

$250,000 Annual Aggregate

Other Limits can be negotiated.

Questions?

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