A Skilled Business Insurance Agent Helping You Deal With Errant Staff
If your business is suddenly facing the financial risk of fraudulent employees, are you protected? In an article for Insurance Journal dated January 14, 2002, writer Stephanie K. Jones reports:
“A California man pled guilty to knowingly receiving, possessing and without authorization appropriating stolen trade secret information belonging to his former employer—specifically, customer and order information in databases relating to his employer’s sales. He admitted to having made $300,000 in gross sales using the databases, resulting in a $60,000 net profit for himself.
• An accountant and her husband were accused of embezzling $18 million from her employer, a California builder and venture capitalist, during her eight-year stint with the company.
The scenarios above, culled from newspaper reports and government sources, describe instances in which employees were either convicted or charged with committing crimes against their employers.
Are these cases random and rare? Hardly.”
Fraudulent employees are among a company’s worst nightmares. The Association of Certified Fraud Examiners states that in general, employee fraud or dishonesty costs companies up to 6% in annual revenue losses, and many businesses in the State of Michigan are steadfast against hiring anyone convicted of dishonesty. If you are worried about such people in your organization and you want to protect your assets, a reputable business insurance agent like one from Allied Insurance Managers Inc. is ready to help you spread the safety net.
Employee dishonesty insurance falls under crime insurance, which protects the company from other instances such as theft, embezzlement, forgery, or even fraudulent transactions using company credit cards. Business advisors or insurers may recommend taking out crime insurance policies while the company is being incorporated. However, extensive planning with your preferred business insurance brokers is needed to determine the payout level when a loss is discovered during the life of the policy– or even up to a year after it expires.
In today’s information age most businesses transactions are taking place online and over secure connections. However, business owners looking for employee fraud protection should consider coverage against electronic fund transfer and computer fraud.
The size of a company often plays a role in how effective an employee dishonesty insurance policy may be. Some insurance specialists claim that small or medium-sized businesses tend to be too trusting of their employees, opening the doors for abuse. On the bright side, owners/managers who run the business thoroughly can be in a position to discover fraud and act accordingly.
(Source: When Good Employees Go Bad: Crime Insurance for Employee Dishonesty & Fraud, Insurance Journal, 14 January 2002)