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Commercial Insurance
Thursday, January 1, 2009
Scourge of fraud

Commercial Crime has broadly been defined as fraud in all its different guises. The financial damages associated with this phenomenon can be immense and crippling to any business. The Global Economic Crime Survey, conducted by PriceWaterHouse Coopers in 2007, revealed that one in every two international companies had fallen victim to economic crime in the two years preceding the survey’s release.

In South Africa, this trend is more prolific than in most parts of the world with 72-percent falling prey as opposed to the global average of 43-percent. These staggering statistics have left local businesses with little choice but to mitigate this risk with a watertight insurance policy that provides protection against this scourge. Commercial Crime insurance generally covers employee dishonesty, computer fraud (including "hacking", electronic data loss and computer viruses), extortion, contractual penalties, as well as fraudulent transfer instructions.
“Prior to taking out a policy of this nature, companies would be well advised to carry out a risk assessment to identify any weaknesses that may exist in its controls. Loopholes often reveal themselves in areas such as creditors’ payments, EFT debtors with fraudsters rolling debtors books, petty cash abuse, international transfers, payroll, as well as stock theft,” says Camargue Underwriting Managers divisional head, Donna van der Merwe.
She goes on to add that those seeking Commercial Crime insurance should ensure their losses will be covered during the period of insurance, and in any instance that occurs subsequent to the Retroactive Date. This ensures that losses which may have taken place over a number of years are also covered.
“Furthermore, there is a noticeable correlation between incidents of fraud and unfair dismissal activity at the CCMA,” says Van der merwe and she advises companies to consider packaging their Commercial Crime Policies with an Employment Practices Liability product wherever possible.
And Commercial Crime cover is not a privilege afforded only to big business. Camargue Underwriting Managers, for example, has insurance on offer to smaller enterprises currently exposed to the fairly restrictive “Multimark” type policies.
The message is clear that no company, irrespective of its size or stature, is safe in the face of Commercial Crime. The statistics speak for themselves and the chances of falling victim to fraud are greater than those of never encountering this costly exercise. Commercial Crime cover, it seems, is no longer a “nice to have” but an absolute necessity.

Copyright © Insurance Times and Investments® Vol:22.1 1st January, 2009
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