Does your business hold Commercial Crime Insurance to protect against internal and external fraud?

Five types of frauds consistently reported include:

• Asset Misappropriation,
• Procurement Fraud
• Bribery & Corruption
• Cybercrime
• Accounting Fraud

The majority of businesses endeavour to ensure that their buildings, stock, machinery & plant, computers, etc. are protected in the event of a fire, theft or flood, however many omit to include Commercial Crime Insurance within their insurance programme.

Economic Crime continues to be a major concern for organisations of all sizes, across all regions and in virtually every sector. In PWC’s Global Economic Crime Survey 2014, one in three organisations reports being hit by an economic crime.

A Commercial Crime Insurance Policy can provide your business with protection against theft or fraud by employees and third parties, whether there is collusion or not. Policies include cover for

• Own losses and Third Party assets in your custody or control
• Commercial disruption where crime stops business
• Destruction or damaged caused by Criminal Acts
• Malicious data damage (usually subject to a sublimit)
• Telecommunications fraud (usually subject to a sublimit)
• Public utility fraud

How to obtain Commercial Crime Insurance?

To provide an indication (subject to completion of a proposal form prior to policy inception), we just require:

Annual turnover
Annual wage roll
Number of employees
Number of locations
Any relevant loss history

Stock theft by long-standing employee

The employee of a specialised UK manufacturer had been working for this company for almost 30 years and was considered a highly trusted employee. He did not start perpetrating his fraud until the last six months of his employment. He had a senior position and was responsible for ordering all stock within a required budget. The type of stock ordered, however, was not monitored by his managers. The employee stole £70,000 of stock over a six month period.

Employee hides fraud behind specialised knowledge

A systems manager was working for a manufacturing company for 14 years and stole property worth £150,000 during the last 7 years of his employment. The employee was responsible for ordering all IT equipment required for use by the company. The employers were impressed by the employee’s expertise and trusted him with the entire IT budget, without ensuring adequate controls were in place to record the type and amount of products ordered and whether they were accounted for on the premises. A colleague had become suspicious of the employee’s activities, but it was not until a company Christmas party that this was disclosed to senior management! Otherwise, the loss could have continued undetected for many years to come.

Slow-burn fraud by finance director

A building manufacturer in Ireland discovered their finance director had stolen €215,000 after a client contacted them querying an overdue payment that the insured owed. Although the insured’s accounts had shown the money had been paid, an inquiry by the board discovered monies had in fact been transferred to fraudulent bank accounts, controlled by the finance director and family members. The FD had manipulated refunds and payment procedures and had personally written and signed computer-produced company cheques each month for small amounts to avoid suspicion. Unfortunately, he was able to get away with this for 9 years before being caught out.

Internal gang uses stolen passwords to manipulate sales system

A retail computer company made a claim for £112,000 after it discovered three of its employees, in collusion with a third party, had stolen 40 computers through sales at four regional department stores. By using other colleagues’ passwords to access the orders and sales system, the employees were able to raise fraudulent orders and issue fictional invoices. Delivery of the insured’s property was made to third parties without payment for 8 months. It was not until a fraudulent delivery was returned to the insured’s premises that the fraud was discovered.