Importance of Commercial Crime Insurance

Topics: Insurance, Theft, Crime Pages: 8 (2403 words) Published: February 11, 2011
The Importance of Commercial
Crime Insurance

Executive Summary

The current economic pressures that society faces has resulted in a steady increase in commercial crime. Internal theft, deception and fraud are just some of the examples that can and have damaged many businesses reputations. In light of the recent scandals that have taken place, such as Enron and WorldCom, companies must now consider crime insurance as a vital survival tool.

Recent reports state that nearly one in three organizations around the world were victims of economic crime during the past year. In Canada alone it is reported that employees steal approximately $20 billion in money, securities, stock and other properties annually. Businesses must be aware of these facts. They should implement plans before it is too late and before there are destructive losses.

Improvements in technology have opened up more doors for criminals to infiltrate. Private data can be stolen, copied, forged, and manipulated with greater ease through hacking. This poses all sorts of new threats for businesses and makes them more inclined to purchase commercial crime insurance.

As crime insurance is not covered under property insurance, it is critical to obtain in this time of increased crime. A small-to-mid-sized organization pays an average premium of about $1000 for a $100,000 insurance coverage. This is seen as a good deal to most business owners as it brings them peace of mind.

Deception in organizations has been a growing concern in recent years. Everyone knows about the huge scandals that have recently caused Enron and WorldCom to go bankrupt. Corruption in an organization can grow to the point where it brings the whole company down.

Crime cannot be stopped completely, so companies must look at ways to minimize it. As criminals will always aim for the target that has the greatest return with the least amount of effort and risk involved, certain methods must be implemented.

Methods to Reduce Crime:
Install surveillance cameras and security systems
Property marking
Security Guards
Employment Screening

With the recent publicized corporate scandals and crime in the business world companies must look at ways to prevent crime and insure their assets. Crime can be committed in many different ways and generally attacks companies’ weak points. This can range from fake employees and suppliers, theft of money, securities and property, to imitated accounts payable. Fraud and embezzlement in the workplace is on the rise, occurring in even the best work environments. This poses problems for companies who face the possibility of devastating losses. Crime insurance offers a peace of mind to companies and provides funds to replace assets or any damages inflicted. As property insurance does not cover crime, crime insurance is important for risk managers. Crime insurance is found under the fidelity coverage category. Fidelity insurance can be defined as losses caused by dishonest acts of employees. Crime insurance offers easy, affordable broad coverage that reimburses businesses for losses due to employee dishonesty. Crime insurance is designed to enable businesses to secure essential protection cost-effectively, with high limits of coverage and low minimum deductibles. Crime Insurance Today

The global economic downturn has increased pressures and motives to commit fraud. It was reported that nearly one in three organizations around the world were victims of economic crime during the past twelve months. Of those, 43 per cent said that the incidences of fraud in their organizations had increased during the period. Economic crime was found to be higher in large companies, with 46% of organizations with more than 1000 employees reporting incidents (Economic Pressures). Other statistics show companies are not spending what they used to spend on loss control. The economic crisis also has spurred an increase in the rate of...
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