Fraud claims and sales of fraud cover to soar warns broker
Marsh has warned fraud claims will soar next year and more UK companies will buy fraud insurance protection as the world economy continues to deteriorate.
Dean White, a managing director in the Financial and Professional Practice, said: “Historically, when times are hard fraud increases; individuals come under increasing pressure to make ends meet and many businesses are struggling to stay afloat. In such circumstances, unlawful practices which otherwise would have been viewed as unacceptable, such as the manipulation of accounts, false revenue booking, insider fraud and the selling of information to organised crime, may appear a lucrative option.
“Reported fraud cases in the UK were up 15% on last year, but this probably masks the true picture. As a result, many of our clients are increasing their levels of fraud insurance protection and expanding their coverage to include computer and data-related fraud.
“Insurance claims notifications will continue to grow through 2009. Financial institutions will likely lead the league table of victims in terms of overall monetary value, but the scale and frequency of corporate, non-financial institution fraud and theft will show the sharpest increase.
Marsh said good risk management was vital in understanding and addressing the threats posed by corporate fraud. It could mean the difference between survival and failure. Marsh’s recommended actions for vulnerable companies include:
- Vigilance: look out for increasing levels of employee stress or out of character behaviour patterns.
- Controls: ensure segregation of duties in high risk areas, enforce holidays and the handover of work.
- CV check: if hiring new staff take up references and check qualifications.
- Security: ensure that exit procedures are robust and that both physical access to premises and computer access are appropriately limited or removed.
- Staff buy in: ensure that a comprehensive whistle-blowing policy is in place; encourage staff to raise concerns about malpractice and create an open working environment.Marsh has warned fraud claims will soar next year and more UK companies will buy fraud insurance protection as the world economy continues to deteriorate.