Employee Theft is on the Rise

It’s hard to believe, but it happens more often that one might think. The Association of Certified Fraud Examiners (ACFE) has estimated that fraud costs U.S. businesses more than $600 billion annually. Furthermore, the report states:

In another survey, 39% of asset misappropriations was the result of billing schemes. The cost of this fraud comes right off a company’s bottom line. Purchasing schemes involving kickbacks, accounts payable fraud involving ghost vendors, payroll and check fraud, or inventory theft can reduce corporate profits by millions of dollars.

Various specialized types of Professional Liability Insurance are available, including:

Crime Insurance can Protect the Bottom Line.

Commercial Fidelity Insurance (crime insurance) is a form of First Party Insurance providing indemnity to Insureds.

Examples of covered loss include loss due to employee dishonesty, robbery, burglary or mysterious disappearance. Additionally, crime insurance can be tailored to provide coverage for your company’s ERISA based plans, eliminating the need for an ERISA bond while potentially providing broader coverage. By law, every ERISA-based plan is required to have an ERISA bond or fidelity coverage.

Additional Examples

Embezzlement = $244,000
An employee altered company deposit slips after the owner of the company had approved them. The employee would prepare two deposit slips: one depositing funds into the company’s account, the other depositing funds into the employee’s bank account. The embezzlement continued uninterrupted for three years because the employee handled both bookkeeping and deposit activities for the company. The employer was forced to lay off several valued employees.

Stolen Inventory = $345,000
A regional sales director took on additional inventory of products for alleged seasonal sales pushes. In reality, a portion of that inventory was sold “out the back door” unbeknownst to corporate headquarters. That same sales director had been named “Employee of the Year” several times over his 17-year career.

Crime / Fidelity Coverage

As much as we’d like to not believe it — many more crime claims than fire claims are filed each year.