Employee dishonesty is costly and pervasive, with small businesses being the most vulnerable to occupational fraud and abuse.   The National Association of Certified Fraud Examiners 2014 Report to the Nation on Occupational Fraud and Abuse reports that the median fraud loss suffered by organizations was $145,000 and 22% of the cases involved losses of at least $1 million.  Furthermore, the higher the perpetrator's level of authority, the greater the amount of the loss.  Collusion increases the amount of the loss, with two perpetrators increasing the median loss to $200,000, three perpetrators increasing the median loss to $355,000 and four or more perpetrators increasing the median loss to over $500,000.   Losses by industry put Healthcare related organizations in fourth with 7.3% of the losses and a median loss of $173,000.  

According to the report, check tampering and fraudulent billing are the most common small business fraud schemes.   Lack of adequate internal controls is most commonly cited as the factor that allows the fraud to occur and the report confirms the expectation that smaller businesses generally have fewer or weaker controls in place than their larger counterparts.

Crime Coverages

Travelers Wrap+® Fidelity/Crime provides a broad range of coverages for financial losses due to specified perils, including employee theft, on premises and in-transit theft, forgery and alteration and computer theft. Automatic coverage is provided for employee benefit plans and includes Inflation Guard, a unique feature from Travelers that automatically assures policy period compliance with the limit of fidelity insurance required by ERISA for growing employee benefit plans. Coverage is provided on a Discovery basis, which provides for uninterrupted coverage back across organizational history, regardless of prior policy structure.

"Nothing stated herein affects the terms, condition and coverages of any insurance policy or bond issued by any of the referenced insurers, nor does it imply that coverage does or does not exist for any particular claim or type of claim under any such policy or bond.  Availability of coverage referenced in this document can depend on underwriting qualifications and state regulations."

Coverage underwritten by Travelers Casualty and Surety Company of America and its property casualty affiliates, Hartford, CT 06183