As rewarding as it is to run your own company, employee theft statistics are a sad reality for owners. In a CompareCamp.com article titled, “39 Employee Theft Statistics: 2020/2021 Impact & Costs to Business,” 75% of employees admit to stealing from their workplace. Many believe that because they are not pilfering in large amounts, just items such as stationary and pens, their actions do not affect the bottom line of the business. But, each of these “small” occurrences of theft total up to an average of an annual 5% loss of business revenue.
Ninety-five per cent of employers have been stolen from by their employees, and employee fraud isn’t just simple instances of taking a USB stick home with your company’s name on it. The more severe examples, which account for about 30% of incidents, last longer than five years, and those that carry on for more than 10 years without being detected cost an average of $5.4 million per business.
Is employee theft worse during the pandemic?
Loss Prevention Magazine reported at the end of 2020 that even though employees are grateful to have jobs, during times of economic downturn employee theft tends to rise regardless. Some may find it justifiable (and many may agree) to “take advantage” of known loopholes. Employees may perceive themselves as being taken advantage of by low wages and increased risk in the workplace due to COVID. Those who would have never considered defrauding their employer in good economic times may do so in turbulent times because of their own insecure state of affairs.
Reported incidences of employee theft are on the uptick, unfortunately. It may be that businesses are just noticing things they may not have before due to being more extra diligent with their ordering and inventory in an attempt to save costs, and are therefore noticing more indiscretions, or that more employees have “sticky fingers.” Or, more likely, a combination of both.
Fidelity insurance protects business owners
Regular business property insurance policies cover for criminal acts such as a prowler breaking in or graffiti artists “tagging” your walls, but they do not always cover for thefts from employees. Business owners should review their policies closely for the details of their coverage against employee theft. If you have questions, you can always access the knowledge of the experienced insurance brokers here at Lane’s Insurance. We can go over your current coverage with you and help ensure you have the protection you need.
Fidelity insurance is specifically designed to manage fraud occurring from within your business. It covers for direct financial loss due to the dishonest actions of an employee and can be customized to exactly suit the needs of owners. Theft happens at businesses both large and small, but, unfortunately, smaller businesses are more often targeted. This happens for many reasons, including fewer anti-fraud measures in place and an employee pool with a high rate of overturn. Fidelity insurance fills the gaps in your business insurance because it is specific to employee theft.
As with all of the insurance policies we provide, we will help describe the details of your fidelity insurance coverage. For many policies, the policy-holder will have to be able to prove that the employee intended to cause a loss to the business to either personally profit themselves, or to cause someone else to profit. Without evidence such as video, emails, or bank transactions, the costs for these types of investigations (which can be extensive), are not usually covered. This just means that in order for fidelity insurance to be a viable option, business owners may need to install some additional security measures.
Fidelity insurance also typically asks that policy-holders take steps to retrieve their own property as a condition of payment under a fidelity bond.
What should employers watch for?
A CNBC.com article says that employee theft costs U.S. businesses more than $50 billion a year. It’s not only hard on the financial bottom line, employee theft is very difficult for owners, who have often come to know and trust the employee.
The costliest types of employee fraud, according to CNBC.com, are:
- Theft of money, products, merchandise, information, etc.
- Manipulation of accounts payable
- Theft from payroll
Experts say to watch for signs such as employees asking for information that they don’t necessarily need to do their job, possessiveness over their transactions, a failure to share information, and odd behaviours (spending a lot of money, paranoia, and drastic life changes).
The best way to protect yourself from employee theft is to be proactive. Always severely restrict access to keys, computer data, inventory, supplies, and merchandise. Keep diligent track of all inventory. Never allow a single person to manage cash and payments from collection through to deposit. Divide bookkeeping duties, and even consider rotating them if possible. Create written policies, and enforce and follow them.
Property implementing business safety measures takes time, work, and knowledge. If you are overwhelmed, hiring a security risk management expert that comes recommended by people you know could be a good place to start.
Trust Lane’s for All of Your Business Insurance Needs
Life is full of surprises, and not all of them are good ones. You’ve worked hard to grow your business, and you need to protect that investment with the right business insurance policy.
A few additional business insurance policies available through Lane’s are:
- Commercial auto insurance
- Commercial property insurance
- Commercial surety bonds
- Contract surety bonds
- Oil and gas insurance
- Rental property insurance
As insurance brokers, we work for you, not the insurance companies, and can pick and choose the best options available from several of Canada’s top providers. Give us a call so we can get to know you and your unique insurance situation. Contact us at our Calgary, Banff, Edmonton and greater Alberta offices.
