Commercial crime is more than burglary or theft of office equipment. There are several ways that your business could be exposed to crime, both from within your organization as a result of employee dishonesty or from half the world away through electronic fraud. Crime Insurance provides coverage for events not covered by most property or liability insurance policies. Let’s take a closer look at how crime insurance can protect your business from a variety of threats.
Crime Insurance, explained
Crime insurance is a form of risk management that protects a business from the loss of property, money or merchandise that business-related crimes may cause. It allows the company to file claims following the occurrence of criminal offences that have the potential to ruin the business financially, such as securities theft, robbery, embezzlement, forgery or other similar crimes.
Risk factors for commercial crime
Certain factors increase the risk of crime in your business. If any of the following are true, you can probably benefit from Crime Insurance:
- You have five or more employees: Headcount growth i.e. more people means more risk.
- Your business processes financial transactions: Acquiring customer data makes you more susceptible to fraud.
- Your employees have access to sensitive data: As your team grows, it becomes harder to monitor everybody’s activity.
- You hold inventory on-hand: Bringing in new equipment, including computers and laptops, could make you a target for theft.
- Revenue increase: Access to more money makes you more attractive to fraudsters
Crime & Fraud insurance
Electronic fraud is on the rise and, unfortunately, employee dishonesty continues to be a major source of loss to business. If your office computer is stolen, consider the damage that may result from the loss of its contents: Your client list, accounting files or intellectual property. Many commercial property insurance policies do not cover these types of crime-related losses. Crime & Fraud insurance is an important consideration for any business.
What is your business’ exposure to crime?
The scope of Crime & Fraud insurance coverage can vary, depending on the risks faced by your particular business. Crime coverage can help protect your business from internal and external threats, such as:
- Employee fraud & dishonesty: For example, an employee hacks into your payroll system to transfer funds into their own bank account.
- Reimbursement for computer fraud: Can provide a crucial layer of protection for any money or securities lost via computer fraud, which is an important piece of an effective cyber risk management program.
Any costs resulting from a data breach aren’t covered by Crime Insurance – that’s handled by Cyber Insurance. In other words, if an outside party (rather than an employee) steals your customer data, you would need this type of insurance coverage.
- Misuse of funds: Provide protection from misuse or illegal transfer of funds, ensuring funds are safe from internal criminal acts.
- Credit card, debit card or automated teller card fraud: Provides coverage for any loss as a result of falsification or alteration of any document required when using a credit card, debit card or automated teller card issued in the name of the insured.
- Depositors forgery: Provides coverage for losses that result from the forgery or alteration of a cheque.
- Loss of money and securities inside and outside your premises: Provides coverage in the event money is stolen from your cash register or night deposit bag.
According to a Travellers Insurance report, more than half of Canadian companies experienced fraud in 2017 and 2018, up from 18% in 2016. In 2018 alone, the Canadian Anti-Fraud Centre (CAFC) received 2,263 reports of business fraud of various kinds, with a total reported loss of $17,501,617.
Why Crime Insurance coverage is necessary
The Association of Certified Fraud Examiners’ (ACFE) most recent report found that organizations with fewer than 100 employees see the largest share of fraud cases: 28 percent. Worse, median losses are $200,000 per incident, which is higher than losses for any other business size. It is believed that smaller businesses are more susceptible to fraud, mostly because they have fewer resources to prevent and detect it, according to the ACFE.
Fraud committed by an employee
You want to trust your employees and the people you do business with. However, no business is immune to the threat of crime and fraud. Statistics show that fraud by employees is a significant problem for Canadian businesses. For example, 25% of internal fraud cases result in losses of a million dollars on average. This occurs even with advances in technology and computer science, which should make fraud much easier to eliminate.
General Liability and Property insurance does not provide coverage for employee theft, forgery, or dishonesty. Commercial Crime insurance generally provides coverage for money, securities and property against employee acts regarding theft, robbery, fraud, extortion and forgery.
While many businesses continue to operate with a large percentage of their employees working from home during the COVID-19 pandemic, the chances of an employee engaging in unethical business practices is a genuine consideration.
Crime prevention strategies for your business
The reputation of your business is built on the trustworthiness of your staff and how you treat clients. If you own your business, it is important to stay vigilant about preventing business crime. Protecting your information, your clients and your staff will reduce the chances that you or your clients will be victims of crime. Here are some preventative suggestions to keep your business secure:
1. Run security checks on staff
Have potential new employees go through a security check. Many businesses and human resource firms provide this service for a reasonable fee and will include extras, like reference checks and resume experience verification.
2. Restrict terminal access
If you have a restaurant or retail store, don’t keep your credit/debit card terminals within easy reach. Lock them up when they’re not in use.
3. Inventory control systems
The more streamlined and vigilant you are with inventory control procedures, the less likely it is that products will go missing.
4. Protect your customers online
Leaked credit card data can have a negative impact on your company’s reputation, so protect yourself and your customers. If you have an online store, secure financial transactions and customer data by employing businesses that specialize in cyber security.
Crime Insurance vs. Cyber security
With advancements in technology to make your business run more efficiently, there’s potential for cyber criminals to attack and breach your data. Educate yourself and your staff on the most common types of cyber-attacks and look into an adequate cyber insurance policy.
Install security systems
Install security systems to monitor your operations while you’re not there. If someone knows they’re being watched, they’re less likely to steal.
As a business owner or manager, you’re the front line in preventing crime for your business. Crime insurance and prevention can work hand in hand to protect your business from potential loss. Contact one of our isure representatives today to discuss the benefits of adding crime insurance to your commercial property policy.