CHICAGO (CN) – CNA Financial says it is covered under a $25 million policy for an employee’s theft of $16 million in insurance premiums and demands in court that its insurer pay up.
CNA Financial Corp., a Chicago-based insurer with revenues of $9.3 billion in 2016, and its subsidiary Continental Casualty sued underwriters at Lloyd’s of London, a major global reinsurer on Friday in Cook County, Illinois, Circuit Court.
CNA says it is insured through Lloyd’s of London under a primary comprehensive crime bond meant to protect it against internal fraud.
The bond allegedly provides CNA with $25 million in coverage, subject to a $500,000 deductible.
In February 2016, CNA discovered that a high-ranking employee, initially hired in 1988 and subsequently promoted to vice president of underwriting in the Alternative Risk Group, had stolen $16 million in premiums since 2001.
The fraud was not discovered until after the executive was fired for an unrelated reason, and other employees went through the files in his office.
But CNA says when it submitted a claim under its policy to recover losses due to the former employee’s fraud, Lloyd’s denied coverage.
“Defendants have wrongfully disclaimed coverage and have failed to provide coverage due under the bond,” CNA’s lawsuit says.
CNA also seeks coverage for the costs and fees incurred by its counsel Seyfarth Shaw in auditing and assisting the investigation of the loss.
It is represented by Sarah H. Dearing with Hinkhouse, Williams, Walsh.
Lloyd’s spokesperson Lizzie Lowe said the underwriter could not comment on pending litigation.