BGES Group Insurance

Employee Embezzlement on the Rise – Are You Protected?

BGES Group Insurance

A typical organization will lose an estimated 5% of its revenues every year due to fraud, according to a study by the Association of Certified Fraud Examiners.

The median loss among organizations both large and small was $140,000 per occurrence, and more than 20% of embezzlement losses were more than $1 million, the association found.

With those staggering numbers in mind, if you have not already done so, you need to take steps to reduce the possibility of employee theft – and also make sure you are adequately covered if they do steal from you.

Small organizations are especially susceptible to losses from employee embezzlement. These problems are often seen in cash-heavy businesses, or those with large inventories, but employee embezzlement is most frequently experienced in organizations lacking owner oversight of financial processes, usually due to placing far too much trust in employees and having no internal controls.

The new study by the fraud examiners association was released as another study, this one by professional security firm Marquet International, found that arrests and indictments for embezzlements had reached a five-year high in 2012.

Embezzlers are most likely to be a company bookkeeper, accountant or treasurer, who is female, in her 40s, and without a criminal record. The reason it’s more often than not a woman is that they are typically in the three aforementioned jobs.

How do they do it?

Marquet International in its study found that the most common ways of embezzling are:

  • Bogus loan schemes, which include cases in which fraudulent loans are created or authorized by the perpetrator from which funds are taken for their own benefit.

  • Credit card/account fraud cases, which involve the fraudulent or unauthorized creation and/or use of company credit card or credit accounts.

  • Forged/unauthorized check cases, which are those in which company checks are forged or issued without authorization for the benefit of the perpetrator.

  • Fraudulent reimbursement schemes, which include expense report fraud and other cases in which a bogus submission for reimbursement is made by the perpetrator.

  • Inventory/equipment theft schemes, including those cases in which physical corporate assets were stolen and sold or used for the benefit of the employee.

  • Payroll shenanigan cases, including all forms of manipulation of the payroll systems in order for the perpetrator to draw additional income.

  • Theft/conversion of cash receipt cases, which involve the simple taking of cash or checks meant for company receipts and pocketing or converting them for one’s own benefit.

  • Unauthorized electronic funds transfers, including those cases in which wire transfers and other similar transfers of funds are the primary mode of theft.

  • Vendor fraud cases, which include those where either a bogus vendor is created by the perpetrator to misappropriate monies or a real vendor colludes with the perpetrator to siphon funds from the company.

Thwarting embezzlers

Liability insurer Camico suggests that educating employees on the detrimental effects of employee fraud on the organization can reduce the likelihood of embezzlement.

Also, if you implement a regular review of bank and credit card statements, you’ll have a better chance of catching a thief. Company owners should look at the cleared transactions to determine the legitimacy of payees, including examining actual cancelled checks.

Also, it’s easy for transactions to be changed in the accounting system after the fact. An ill-intentioned bookkeeper could use this tactic to cover up their tracks. If you feel you do not have the time or expertise to oversee you finance department, you should contract with a qualified CPA to perform these checks and balances.

There are also inexpensive physical barriers that should be used to deter criminal activity. To protect cash, you can buy a $200 drop-slot safe to securely keep the night’s deposit until it is taken to the bank.

Similarly, security cameras deter misbehavior and can be the source of valuable evidence in case an incident occurs.

Securing coverage

Finally, you should consider taking out a crime insurance policy.

Most business insurance policies either exclude or provide only nominal amounts of coverage for loss of money and securities as well as employee-dishonesty exposures.

But a crime insurance policy protects against loss of money, securities or inventory resulting from crime. Common crime insurance claims include employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire-transfer fraud, and counterfeiting.

Call us to discuss whether a crime policy is right for your company.

[embedyt] https://www.youtube.com/watch?v=eWFmjYirlkw[/embedyt]

BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Funding for the Construction Industry, Worker’s Compensation, New York State Disability, Group Health, Life insurance and Personal lines.

BGES Group are Worker’s Compensation Specialists for the States of New York, New Jersey and Connecticut – Issues we address: 1) Lowering pricing – we have specialty programs that can save you up to 40%; 2) Finding a new company; 3) Being cancelled or non renewed; 4) Audit disputes; 5) Company creating fictitious payroll at audit time; 6) Lowering high experience modifications factors; 7) Misclassification of payrolls; 8) Lowering or eliminating renewal deposits;   9) Getting coverage when you’ve been without for a few months; 10) Covering multiple states under one policy; 11) Eliminating 10% service or policy fees; 12) Timely issuance of certificates; 13) Always being able to get someone on the phone or by email when you need to.

Special Contractor Insurance Programs (NY, NJ, CT) – We we have 50+ insurance companies to market your general liability, umbrella liability, business auto, workers compensation, bid & performance bonds and group health coverages.  We help contractors set up proper risk transfer mechanisms.  If you’re a contractor we offer extensive information about insurance markets, coverages, risk transfer mechanisms, subcontractor screening, ways to lower your insurance costs that lower them.

New Jersey and Connecticut Contractors:  We have a fiercely competitively priced (savings up to 50%)  General Liability, Umbrella Liability, Business Auto, Workers Compensation program.  Want to lower these costs?  Get a quote today!

If you would like to speak with us call Gary Wallach at 914-806-5853 or click here to email or click here to visit our website.   
     
http://www.bgesgroup.com or http://www.workerscomp.store

Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538

e-mail: bgesgroup@gmail.com

© – Copyright – BGES Group

BGES Group Video

As Health Deductibles Rise, Employees More Likely to File Workers’ Comp Claims: Study

BGES Group Video

Sometimes, injured employees are afraid to file a workers’ comp claim after being injured at work because they fear the specter of retaliation by their employer.

Experts suspect that up to 10% of workplace injuries are never reported because the workers choose to have the injuries covered by their employer-sponsored health plans. Most employers may not be aware of the full extent of their workplace injuries because of this phenomenon.

But, that could change as workers are saddled with higher deductibles and out-of-pocket expenses, according to a new study.

A number of past studies have found that if the costs to workers for having their personal health insurance cover a workplace injury is less than the “cost” to them of filing a workers’ comp claim, they will opt to have their health insurance cover it instead.

Here’s what studies have found over the years:

  • A 1996 study found that workers without health insurance have an incentive to claim their medical issues are work-related even if they are not, so that workers’ compensation insurance will pay for care. The study also found that if the injury occurs at work, health insurance may deter workers from filing for workers’ comp if they feel there is a cost to filing a claim.

  • A 2007 study found that a genuine workers’ comp claim can be “costly” to file for a worker if:
    – The employer dissuades workers from filing workers’ comp claims because they fear the claims will increase their premiums.
    – The injured worker does not want to deal with the paperwork for a workers’ comp claim.
    – The individual feels there is a stigma associated with filing for workers’ comp.

  • A 2003 study of Michigan workers and their physicians found that 70% of injured workers did not file for workers’ comp, and that 36% of the non-reporting injured workers cited having health insurance as a reason they did not.

What could be ahead

The most recent study, by the Workers’ Compensation Research Institute (WCRI), found that injured employees are more likely to file workers’ compensation claims when they have high-deductible group health plans.

The study found that workers with a remaining group health insurance deductible that exceeds $550 are more likely to file workers’ comp claims than if the deductible were less. As more workers find themselves staring at higher health insurance deductibles, they will properly report their workers’ comp claims to their employers.

“In years past, workers may have chosen to have a work injury covered within their group health plan,” John Ruser, WCRI president and CEO, said in a statement. “But the increasing cost of deductibles may cause them to consider having the injury covered ─ where it potentially belongs ─ in the workers’ compensation system, where there are no deductibles or copayments for the medical care they receive.”

This is likely to add about 5% more claims into the system, the WCRI found.

What you can do

There are risks to both your employee and your organization if a worker does not report their workplace injury.

Urge your workers to report any workplace injuries so that you can have them properly treated. If a worker decides to not report the claim and they have their health insurance pay for it, problems can take root and cause major issues for you later:

  • Your insurer loses the chance to direct the initial treatment to an occupational health clinic that specializes in treating workers’ compensation injuries and coordinates with the employer’s return-to-work program.

  • A delay in seeking treatment may cause a deterioration in the employee’s condition that will impede their recovery time.

  • It impedes the insurance company’s ability to investigate a claim, determine compensability and identify claims fraud.                              

Gary Wallach Call 914-806-5853 or email: bgesgroup@gmail.com

BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Funding for the Construction Industry, Worker’s Compensation, New York State Disability, Group Health, Life insurance and Personal lines.

BGES Group are Worker’s Compensation Specialists for the States of New York, New Jersey and Connecticut – Issues we address: 1) Lowering pricing – we have specialty programs that can save you up to 40%; 2) Finding a new company; 3) Being cancelled or non renewed; 4) Audit disputes; 5) Company creating fictitious payroll at audit time; 6) Lowering high experience modifications factors; 7) Misclassification of payrolls; 8) Lowering or eliminating renewal deposits;   9) Getting coverage when you’ve been without for a few months; 10) Covering multiple states under one policy; 11) Eliminating 10% service or policy fees; 12) Timely issuance of certificates; 13) Always being able to get someone on the phone or by email when you need to.

Special Contractor Insurance Programs (NY, NJ, CT) – We we have 50+ insurance companies to market your general liability, umbrella liability, business auto, workers compensation, bid & performance bonds and group health coverages.  We help contractors set up proper risk transfer mechanisms.  If you’re a contractor we offer extensive information about insurance markets, coverages, risk transfer mechanisms, subcontractor screening, ways to lower your insurance costs that lower them.

New Jersey and Connecticut Contractors:  We have a fiercely competitively priced (savings up to 50%)  General Liability, Umbrella Liability, Business Auto, Workers Compensation program.  Want to lower these costs?  Get a quote today!

If you would like to speak with us call Gary Wallach at 914-806-5853 or click here to email or click here to visit our website.   
     
http://www.bgesgroup.com or http://www.workerscomp.store

Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538

e-mail: bgesgroup@gmail.com

© – Copyright – BGES Group