Why Your Captive Should Issue an Employee Theft/Fidelity Policy

We're hosting a webinar titled "An Introduction to Captive Insurance" on Thursday September 29.  You can register at this link.

If you're unsure if your company is a viable captive candidate, we'll perform a free evaluation​ It starts with a conversation that lasts between 30-60 minutes and is followed by an analysis of your currently in force insurance policies.

We formed and operate the first series LLC in Montana (named Aegis) for captive insurers.  Several other firms provide key services such as accounting, audit and actuarial work.  Please contact us at 832.330.4101 if you'd like to discuss forming a captive for your company

While no one wants to think their employees steal, it's a remarkably common occurrence.  Consider the following facts from a 2012 report written by the Association of Certified Fraud Examiners:

1. Survey participants estimated that the typical organization loses 5% of its revenues to fraud each year. Applied to the estimated 2011 Gross World Product, this figure translates to a potential projected global fraud loss of more than $3.5 trillion.
2. The median loss caused by the occupational fraud cases in our study was $140,000. More than one-fifth of these cases caused losses of at least $1 million.
3. The frauds reported to us lasted a median of 18 months before being detected.
4. Perpetrators with higher levels of authority tend to cause much larger losses. The median loss among frauds committed by owner/executives was $573,000, the median loss caused by managers was $180,000 and the median loss caused by employees was $60,000.
5. The vast majority (77%) of all frauds in our study were committed by individuals working in one of six departments: accounting, operations, sales, executive/upper management, customer service and purchasing. This distribution was very similar to what we found in our 2010 study.
6. Most occupational fraudsters are first-time offenders with clean employment histories. Approximately 87% of occupational fraudsters had never been charged or convicted of a fraud-related offense, and 84% had never been punished or terminated by an employer for fraud-related conduct

These facts explain why our captives routinely write an employee fidelity policy.