Recession sees increase in commercial crime

Reduced turnover and profits in 2009 saw cut backs 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.

As such “the increase in claims for commercial crimes first noticed in July 2009 has continued into 2010 resulting in insurers firming their renewal terms on commercial risks” explained Brian Gillespie of Alexander Forbes Risk Services.

Despite this increase Gillespie is still finding 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.

Gillespie has also noticed that more risks, including internet fraud, are being written on the broader form commercial crime wording as opposed to the traditional fidelity wording which is 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” adds Gillespie.

More recently Gillespie has also seen an increase in claims for losses over an extended period involving collusion between groups of people. Since, however, commercial crime of this nature requires a heavy burden of proof “insurers are reluctant to open their cheque books until absolutely certain that collusion is established” says Gillespie.

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