Embezzlement leads all other criminal risks in Advisen’s Loss Insight database since 2005.
About 140 cases of embezzlement are in the database. The largest is a $15 billion case in China involving waste at hundreds of state-owned companies. Two Chinese banks were among the government institutions accused of misdeeds.
On the home front, one of the largest embezzlement cases involved an insurer. The Florida Department of Financial Services in 2006 sued the former directors and officers of Aries Insurance Co. for diverting policyholder premiums and illegally distributed the money for personal use. A judgment of $76 million was reached against Aries in 2011.
Maybe not surprising, considering the US financial crisis, the most cases logged for any one year was 25 in 2009. In fact, the most cases involving criminal risks (88) were entered into the database in 2009. Piracy/Hijacking actually led all of these risks with 27 cases in 2009 but, overall since 2005 Theft/Robbery and Forgery/Counterfeit cases are second and third, respectively, when it comes to organizing criminal-risks cases in the database.
The graph below shows the type of criminal risks prevalent in each industry sector—at least for the cases for each industry housed in the database. For instance, theft/robbery cases are most common in the Finance, Insurance and Real Estate industry, with 309 theft/robbery cases among 641 total criminal-risks cases. Theft/robbery scores high in proportion to much less total cases (70) in the Wholesale and Retail Trade industry. This is not the case for Public Administration, where forgery is the most common type of criminal risk in the database’s cases.
Of the cases in Advisen’s Loss Insight database, 60 percent result in losses of at least $1 million. About a quarter of all cases in the database result in losses of about $10 million.
Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or [email protected].
