Make the Best of a Bad Situation!
Recover Those Fraud Losses Through Insurance
The fraudster may have deceived you but that doesn't mean you can't receive full compensation from your crime insurance carrier. Here's how to ensure you have an adequate fidelity policy and a professional fraud recovery team.
A large bank discovered an internal fraud scheme that caused more than $5 million in losses. Though it seriously rattled bank executives, they assumed their crime insurance carrier would cover losses. Unfortunately, they hadn't read the policy in awhile; the bank only had $2 million in coverage. No one had changed the policy in 10 years despite record bank growth.
Locks may keep honest people honest but they won't stand in the way of determined thieves. Even with the best of internal controls, a corporate culture with integrity, and effective policies and procedures, a company still needs adequate, up-to-date crime insurance policies. It also needs an established fraud recovery team of diverse managers to quickly collect solid evidence to support an accurate insurance claim.
Regrettably, many firms don't read their policies or form a fraud recovery team until a fraud occurs. Others limit or even eliminate fraud insurance. And some companies' lack of organization, skill, or desire severely limits payment on insurance claims.
The fallout from poor fraud insurance planning can impede investigations, waste money and time, kill employee morale, and encourage potential fraudsters.
Crime insurance does more than reimburse a company for covered losses. It also provides a significant motivation for the recovery team to search out and identify potentially covered losses and fully explore the extent of the fraud scheme. This financial incentive is important, because many people are more inclined to simply write off a fraud or make a correcting entry, and leave the underlying cancer in place. So if an insurance policy is going to serve as the primary recovery method, it's important to understand it.
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