Insurance Coverage Can Help Toy Companies Manage the Risk of Workplace Fraud

As the economy continues to struggle, white collar crimes are on the rise as companies outsource major operations, reduce their workforce and eliminate employee benefits.

Most often committed by a trusted employee and spanning at least two years, workplace fraud accumulates over time and can reach devastating proportions before being discovered. The ultimate impact can be enormous, even threatening a company’s survival.

According to a 2008 study from the Association of Certified Fraud Examiners (ACFE), American businesses lose 7% of their annual revenues to fraud.  The median loss is estimated to be $175,000; more than one-quarter of the losses exceeded $1 million.

Small businesses are especially vulnerable. The median loss suffered by organizations with fewer than 100 employees is $200,000. According to the ACFE, this is higher than the median loss in any other category, including the largest organizations.  Check tampering and fraudulent billing registered as the most common small business fraud schemes.

“Headlines about trusted employees or executive directors stealing large amounts of money are far from uncommon,” said Benjamin Thrush, Vice President of Business Development at HUB International Northeast. “A well placed crime insurance policy and a strong risk management and ethics program can help toy companies reduce and recoup fraud and embezzlement losses.”

Mr. Thrush suggests that managers of toy companies add coverage by the base policy or by endorsement to their existing business owner’s policies and other commercial office packages. Crime insurance can be tailored to provide coverage for money and securities while on the premises or in transit, employee theft, forgery, funds transfer fraud, money order and counterfeit currency fraud, credit card fraud and much more.

No type of business is immune to this type of risk. The good news is that toy companies can weather the storm by speaking with an accredited insurance advisor. TIA members who have questions about crime insurance, or who would like a free analysis of their current insurance policies, may contact Mr. Thrush at 1-800-706-3023. Additional information on HUB Northeast’s business insurance offerings to the toy industry is available online at www.hub-tia.com.