Recession sees increase in commercial crime

2010-04-13 11:50

Last year’s recession brought about an increase in commercial

crime, Alexander Forbes Risk Services said on Tuesday.

“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,”

spokesperson Brian Gillespie said.

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.

Risky business

Despite this increase, he still found insurers 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 like heavy manufacturing or light engineering.

He 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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