Embed Size (px)
Citation preview
DID YOU KNOW…
According to the Association of Certified Fraud Examiners (ACFE):
· The estimated cost of fraud to the world economy in 2012 was US$3.5trillion (by comparison the estimated combined losses for all classes of non-life insurance over the same period is approximately US$1.4trillion)
· More than one-fifth of the frauds involve losses of at least US$1m
· 49% of companies do not recover any losses that they suffer due to fraud
· Most frauds reported to ACFE lasted a median of 18 months before being detected
DID YOU KNOW… (CONT)
According to the Association of Certified Fraud Examiners (ACFE):
· 77% of all frauds are committed by individuals working in one of six departments:
‒ Accounting ‒ Executive/ upper management‒ Operations ‒ Customer service‒ Sales ‒ Purchasing
· The longer a perpetrator has worked for an organisation, the higher fraud losses tend to be
How to work out what’s covered?
How to prove loss?
THE TWO PROBLEMS WITH CONVENTIONAL CRIME POLICIES
CONVENTIONAL RECIPE FOR FRAUD COVER: Take:
· various categories of fraud e.g. ‒ Skimming - Embezzlement‒ Theft - Corruption‒ Payroll fraud - Cheque/ Bank transfer tampering
Add: · various legal ingredients
‒ ‘permanent deprivation of property’‒ ‘intentional deception’‒ ‘personal gain’
Season for:· insurer appetite
Add:· insurer house style for drafting, definitions etc.
Result = complexity
CRIMESTAR APPROACH TO FRAUD
A simpler recipe:
A single dishonesty based test
“Fraud means theft and/or any other dishonest act or omission…”
No link to ‘Property’ necessary
Result = greater clarity
SHOULD IT MATTER WHO IS RESPONSIBLE FOR THE FRAUD?
Conventional Approach Fidelity Cover
Commercial Crime Cover
Definition of ‘employees’
CRIMESTAR Approach All employees and/or others
CONVENTIONAL RECIPE FOR CRIMINAL DAMAGE TO PROPERTY:
Take: · One of the lawyer’s favourite questions; ‘What is “Property’?
Season for:· insurer appetite
Add:· insurer house style for drafting, definitions etc.
Result = complexity
CRIMESTAR APPROACH TO DAMAGE TO PROPERTY
A simpler recipe:
“any tangible or intangible property owned by the insured or for which the insured is legally liable including money, securities, instruments, documents, data or other
information stored on computer systems”.
Result = greater clarity
HOW TO PROVE LOSS - THE CRIMESTAR APPROACH
Crimes discovered basis of cover
Fully retroactive
Automatic acquisition protection
HOW TO PROVE LOSS - THE CRIMESTAR APPROACH (CONT)
Clear and generous notification regime
‘Proof of Loss’
Additional limit to assist in information gathering process
No blanket exclusion in respect of post-discovery loss
WHAT ABOUT THE OTHER CRIMESTAR EXCLUSIONS?
Controlling Shareholder
Fire, Explosion, Terrorism, Nuclear Hazards
Trade Secrets, Copyright etc.
Trading
Computer Virus
‘Indirect Financial Loss’
SOME OTHER IMPORTANT STUFF…
Ease of application process
Continuity of cover
Worldwide cover
It really is only 6 pages long
Follow me on the WillisWire blog: Francis Kean
Willis Limited
The Willis Building
51 Lime Street
London, EC3M 7DQ
United Kingdom
Tel: +44 (0)20 3124 6000
www.willisfinexglobal.com
Willis Limited is authorised and regulated by the Financial Conduct Authority.
Registered address: 51 Lime Street, London, EC3M 7DQ.
Registered number 181116. England and Wales.
