Employee Dishonesty: Are your employees stealing from you?

Theft by an employee can range anywhere from an office worker stealing petty cash to a healthcare worker stealing medical supplies or drugs, to an accounting clerk re-directing dollars to a personal account.

Organizations are typically shocked when employee theft is discovered. Many times, it is a trusted employee, one who has been employed with the organization for many years. When the claims adjuster examines the employee theft more closely, they usually find little to no oversight on the part of the organization. The sad truth is there can be signs of misconduct that we ignore.

How to prevent Employee Theft?

There are several steps an organization can take to help prevent becoming a victim:

• Select the “Right” Employee:
  • Conduct a background check on the people who have access to the organization’s money and property
  • Verify past employment dates and conduct
  • Institute drug screenings
  • Call the references provided
  • Verify the person’s education and credentials
  • Do a thorough review before someone is hired to your team
• Review Your Policies, Procedures and Checks and Balances:
  • Increase the perception of detection; employees who think they might be caught are less likely to steal
  • Educate employees about fraud
  • Develop audits that focus on high-risk areas
  • Require dual signatures on checks and dual approval for financial transactions
  • Enforce mandatory vacations
  • Conduct audits
  • Have employee support programs for employees experiencing personal and financial difficulties
  • Consider a confidential hotline for reporting purposes
  • Reward information that leads to the recovery of property or money
• Crime Insurance; including Employee Dishonesty Coverage:
  • Purchase Crime Insurance protection
    • This coverage pays for your loss when an employee steals property or money from you
  • Check your limit, is it sufficient?
  • Know your deductible, the amount you are responsible to pay
  • Consider adding the “Third Party Fidelity” coverage endorsement
    • This is coverage if your employees steal from third parties

It is important for you to be aware of your potential exposure to employee theft, to institute strong risk management practices to prevent potential loss, and to purchase Crime Insurance including Employee Dishonesty coverage.

Author: Gary J. Uzelac, CPCU, Vice President, Commercial Insurance

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