Crime cover - ForeFront Plus
Chubb Specialty Insurance

PURPOSE: To insure organisations against theft by employees or directors acting alone or in collusion with others. But the section also provides cover for losses caused by the following crimes by outsiders: computer fraud and funds transfer fraud. Finally, it gives expenses cover associated with a covered crime.

Key cover features

  • No warranties or systems of check
  • Cover for funds transfer fraud by a third party
  • Cover for computer fraud by a third party
  • Cover for expenses related to a covered crime
  • Newly acquired companies: automatic cover if the acquisition does not increase employee or turnover numbers by more than 25%. Includes acquired organisations with previous losses or business activities that are different to the insured
  • No basis of the contract clause
  • No manifest intent requirement: there is no requirement to prove the perpetrator committed the crime with the manifest intent to cause their employer a loss or to make personal gain
  • No requirement to identify the perpetrator
  • No terrorism exclusion
  • Insured’s employee benefit plans covered, with nil deductible

Here are a few examples of when a company may need crime cover:

Stock theft by long-standing employee
The employee of a specialised UK manufacturer had been working for this company for almost 30 years and was considered a highly trusted employee. He did not start perpetrating his fraud until the last six months of his employment. He had a senior position and was responsible for ordering all stock within a required budget. The type of stock ordered, however, was not monitored by his managers. The employee stole £70,000 of stock over a six month period.

Employee hides fraud behind specialised knowledge
A systems manager was working for a manufacturing company for 14 years and stole property worth £150,000 during the last 7 years of his employment. The employee was responsible for ordering all IT equipment required for use by the company. The insured were impressed by the employee’s expertise and trusted him with the entire IT budget, without ensuring adequate controls were in place to record the type and amount of products ordered and whether they were accounted for on the premises. A colleague had become suspicious of the employee’s activities, but it was not until a company Christmas party that this was disclosed to senior management! Otherwise, the loss could have continued undetected for many years to come.

Slow-burn fraud by finance director
A building manufacturer in Ireland discovered their finance director had stolen €215,000 after a client contacted them querying an overdue payment that the insured owed. Although the insured’s accounts had shown the money had been paid, an inquiry by the board discovered monies had in fact been transferred to fraudulent bank accounts, controlled by the finance director and family members. The FD had manipulated refunds and payment procedures and had personally written and signed computer-produced company cheques each month for small amounts to avoid suspicion. Unfortunately, he was able to get away with this for 9 years before being caught out.

Internal gang uses stolen passwords to manipulate sales system
A retail computer company made a claim for £112,000 after it discovered three of its employees, in collusion with a third party, had stolen 40 computers through sales at four regional department stores. By using other colleagues’ passwords to access the orders and sales system, the employees were able to raise fraudulent orders and issue fictional invoices. Delivery of the insured’s property was made to third parties without payment for 8 months. It was not until a fraudulent delivery was returned to the insured’s premises, that the fraud was discovered.