Employee Theft
Not just office supplies! We’re talking about cash, revenues, PROFITS!
According to Chubb Insurance – more than one in three private companies, many of which were uninsured, experienced an employee theft averaging nearly $350,000 within the past five years.
Crime related losses are not typically covered under commercial property insurance policies. Most thefts go undetected for years and when finally discovered can amount to significant damages – even crippling if not killing the organization.
Employee theft can range from the simple isolated event to the elaborate re-occurring scheme and involve one or more employees. The bookkeeper or controller is not always to blame – surveys suggest that trouble can come from any type of employee and that more than half comes from upper management.
Methods of employee theft typically include:
- Manipulation of company records
- Direct theft of cash or products
- Theft of information
A study in 2008 by the Association of Certified Fraud Examiners revealed that the median loss suffered by organizations with fewer than 100 employees was $200,000.
In the last three years I’ve had 3 clients hit with significant employee theft losses. Two were cases in which an employee diverted receivables to their own bank account the third manipulated work hours and the payout of vacation time through a third party payroll company. In all cases, these were trusted employees and worse yet, family friends of the owners and executives. One owner told me “I knew him since he was 18…he was in my will.” Another executive told me that the person spent holidays with their family – and now understood how they could afford to be coming in with Starbucks most days when the owners themselves were sometimes foregoing their own income to make payroll! The stories are usually heartbreaking on many levels.
These thefts ranged from $30K to $250K and took place over 1-2 years.
Diligent hiring practices, mandatory vacation policies, accounting controls and oversight work well but may not always be enough. Protecting the company’s balance sheet can be easy and inexpensive with the addition of employee theft coverage on your commercial property insurance policy.
Ask me about Employee Theft coverage for your business.
