Professional Business
Insurance Agents
and Risk Managers
Tip #1: Loss Prevention
Life Safety, Cooking Exposure, Sprinklered Risks...Read RMR’s Recommendations
Tip #2: Coverage Pointers
Abuse & Molestation Coverage, Building Insurance to Value...Here’s What RMR Says
Tip #3: Crime/Employee Dishonesty
Sadly, employees, volunteers and other trusted individuals steal from companies...How to Protect Yourself
Sadly, employees, volunteers and other trusted individuals steal from companies including social service agencies. This Risk Management Program Update reminds you of the inherent risk associated with various forms of dishonesty and the importance of proper controls.
1. Inventory Shortage/Delayed Reporting
This claim points to the importance of frequent internal audits and timely loss reporting.
In November 2005, during an annual financial audit, it was discovered funds were missing. The loss was reported to the Company in February 2006.
Regrettably the claim was denied. The fact the loss was discovered during an annual audit surfaced a coverage problem. The insured was unable to pinpoint a perpetrator, determine a date of loss or the matter in which the assets were stolen. The late reporting was also regarded as a material violation of policy conditions.
2. Embezzlment of Apartment Rents
The claim points to the importance of a system of checks and balances whenever cash or cash equivalent is a common means of exchange in an insuredís operation.
This theft occurred during October and November 2005. The insured’s tenants usually paid their rent in cash or money orders. The insured’s employee embezzled money by depositing collected rent into their personal checking account. The perpetrator was uncovered shortly after the embezzlement began and is now being prosecuted. The Insurance Carrier paid $6,100 and is seeking restitution, if any.
3. Child Support/Unearned Overtime
The claim illustrates the need for dual controls and vigilant management.
The insured made a claim for losses resulting from the failure to redirect wages to a child support obligation ($8,300). In addition, the involved employee paid themselves more than $17,000 in unearned overtime. That portion of the claim relating to child support obligations was denied since the failure to make a child support deduction is not the "loss of money." The insurance carrier paid $12, 264 for the unearned overtime.
