Commercial crime on the increase thanks to recession

2010-04-13 10:46

The recession had brought about an increase in commercial crime.

“Reduced turnover and profits in 2009 saw cutbacks in salaries, no wage increases and the scrapping of bonuses, pushing many employees to seek alternative sources of compensation, often by stealing from their employers,” Brian Gillespie, the spokesman for Alexander Forbes Risk Services, said in a statement.

As such, the increase in claims for commercial crimes first noticed in July 2009 continued into 2010, resulting in insurers firming their renewal terms on commercial risks.

Despite this increase, insurers were still prepared to negotiate suitable terms for acceptable commercial risks, particularly those risks with higher excesses or clean loss histories, or those in more secure sectors such as heavy manufacturing or light engineering.

Gillespie had noticed that more risks, including internet fraud, were being written on the broader form commercial crime wording as opposed to the traditional fidelity wording, which was far narrower in scope.

“This extends to far smaller businesses, where insurers are now prepared to consider a block of insurance business within a particular range at comparable rates.”

More recently, there had also been an increase in claims for losses over an extended period involving collusion between groups of people.

However, since commercial crime of this nature required a heavy burden of proof, “insurers are reluctant to open their cheque books until absolutely certain that collusion is established”, Gillespie said.

As such, claims involving collusion were usually less successful as they took “an inordinate amount of time and research” to identify, and then link what often look like very separate instances of crime.

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