Blog - Tag: Measured Risk Insurance
The Five Most Common Types of Employee Fraud, Theft
At some point, the odds are that a company will be affected by some form of employee theft or outright fraud.
Fraud can severely crimp a company’s finances and put the firm in a serious bind if the theft is large enough. With technology, fraud has in some ways become easier, but at the same time it typically leaves a trail of electronic breadcrumbs that may be hard to disguise.
According to the Association of Certified Fraud Examiners’ (ACFE) global “Report to the Nations on Occupational Fraud and Abuse” report for 2024, the median loss in the U.S. from a single case of:
- Employee fraud was $61,000,
- Manager fraud was $150,000, and
- Executive fraud was $300,000.
Here are the five main types of employee fraud and what you can do to thwart it.
Purchase order fraud
This is typically carried out in one of two ways:
- The employee initiates purchase orders for goods that are diverted for personal use, or
- The employee sets up a phantom vendor account, into which they pay fraudulent invoices, with funds eventually being diverted to the employee.
Company credit cards
Employees who have company credit cards may use them for illegitimate purposes to purchase items or on entertainment and travel. Some common types of fraudulent use of credit cards are fuel purchases, airfares, home supplies, meals that are not work-related and entertainment.
Payroll fraud
There are typically three ways that an employee can pull off payroll fraud:
- Setting up phantom employees on your payroll systems who are paid like regular employees but whose funds are diverted to the perpetrator’s account.
- Paying out excessive overtime.
- Continuing to pay employees after they die or after they leave your employ.
You should have systems in place to detect whether you have more than one employee with the same bank account number or the same address, unusually high overtime payments and whether dead or terminated employees are still on your payroll.
Sales and receivables
Some employees may collude with vendors to make payments for services never rendered or products never received.
Other times, you may have sales reps who inflate sales to receive higher commissions or bonuses.
Data theft
This involves an employee stealing important company data like trade secrets, personally identifiable information, client credit card numbers or client lists. In some cases, the employee would provide this data to third parties.
You may be able to detect this kind of theft by running tests to see if a database has been accessed by an employee without access privileges or if reports were generated by employees without authorization. You may also be able to run tests to find out if any employees have sent e-mail with attachments that include sensitive company data.
What you can do
According to the report, most theft occurs at one or more of the following stages:
- Procurement
- Payment
- Expense
If you are going to do any employee monitoring, these are the places you may want to focus on first.
The ACFE said that by analyzing transactions in these areas (such as with continuous monitoring systems driven by data analysis), it is often possible to test for a wide range of employee fraud as well as bribery and conflicts of interest.
Also, three out of four fraudsters displayed at least one of the following behavioral clues:
- Living beyond means (39%)
- Financial difficulties (27%)
- Unusually close association with vendor/customer (20%)
- Control issues/unwillingness to share duties (13%)
- Irritability, suspiciousness or defensiveness (12%)
- “Wheeler-dealer” attitude (12%)
- Bullying or intimidation (11%)
- Divorce/family problems (10%)
Multi-Unit Facilities Get Better Deal from FAIR Plan
The California FAIR Plan on July 25, 2025, started offering a new “high-value” commercial property coverage option for larger housing developments, farms and businesses with multiple buildings at one location.
The new limits are up to $20 million per building, with a total maximum of $100 million per location — up from the previous limit of $20 million per location. These coverage limits are available to all eligible applicants for both new and renewal policies.
The FAIR Plan covers the following commercial structures:
- Habitational buildings — Buildings with five or more habitational units, such as apartment buildings, hotels or motels.
- Retail establishments — Shops such as boutiques, salons, bakeries and convenience stores.
- Manufacturing — Companies that manufacture most types of products.
- Office buildings — Offices for professionals such as design firms, doctors, lawyers, architects, consultants or other office-based functions.
- Buildings under construction — Residential and commercial buildings under construction from the ground up.
- Farms and wineries — Basic property insurance for commercial farms, wineries and ranches, not including coverage for crops and livestock.
Why the increase
The decision comes as commercial property rates continue rising due to inflationary pressures, particularly for companies in areas considered urban-wildland interfaces.
Rebuilding costs have also risen substantially over the past five years, making the old FAIR Plan limits inadequate.
FAIR Plan limitations
The FAIR Plan is taking on more policyholders as more insurers pull back from the California market. Under state law, if a business can’t find an insurer that is licensed in California, the first option is to go to the “non-admitted” market, which consists of insurers not licensed in the state but often backed by established insurers like Lloyd’s of London.
If there are no takers in this market, the last resort is the FAIR Plan. However, costly FAIR Plan policies are not a complete replacement for a commercial property insurance policy. Policies only provide coverage for damage caused by the specific causes of loss listed in the policy:
- Fire
- Lightning
- Internal explosion
Optional coverages are available at an additional cost, such as for vandalism and malicious mischief.
If you have to go to the FAIR Plan, we can arrange for a “differences in conditions” policy that will cover the areas where the plan is deficient compared to a commercial property policy.
How to Prepare for Rolling Blackouts
As wildfire seasons grow longer and more intense due to rising temperatures, utilities in high-risk areas are increasingly using public safety power shutoffs to prevent fires sparked by electrical equipment, one of the leading causes of wildfires.
These proactive outages can leave communities without power for hours — or even days — especially during dry, windy conditions. If you live in an area that is prone to wildfires and there is a possibility of rolling blackouts by your utility, you need to be prepared if the power is shut off for an undetermined amount of time.
Prepare in advance
According to the California Public Utilities Commission and Ready.gov, an agency within the Department of Homeland Security, the best time to prepare for a rolling blackout is before fire season begins.
Make an emergency plan: Every household should have a plan that includes communication protocols, meeting points and access to emergency contacts.
Build an emergency kit: Stock it with:
- Flashlights and fresh batteries
- First-aid supplies
- Portable phone chargers or power banks
- A hand-crank or battery-powered radio
- At least one gallon of water per person per day (plus water for pets)
- Nonperishable food that doesn’t require cooking
- Blankets and manual can openers
Plan for medical needs: If you or a loved one relies on electrically powered medical devices, talk with your doctor about alternative power sources. Know how long medications can be safely stored at higher temperatures if refrigeration is unavailable.
Prepare your home:Bookmark your utility’s outage map, learn how to manually open electric garage doors and understand your home’s circuit breakers and fuse boxes.
During the outage
During a blackout, you can stay safe and manage daily life without power by:
- Staying informed: Use a battery-powered radio or your car’s radio to listen for emergency updates.
- Unplugging electronics: Unplug appliances and electronics to avoid damage or data loss. Unplugging also prevents power surges when electricity is restored.
- Keeping refrigerators and freezers closed: The refrigerator can keep food cold for about four hours, while a full freezer can maintain a safe temperature for about 48 hours. Monitor temperatures with a thermometer and use coolers with ice if necessary.
- Using generators safely: Always run generators outdoors, at least 20 feet from windows or doors, and never inside garages or enclosed spaces. Improper use can cause deadly carbon monoxide buildup.
- Avoiding open flames: If using candles, keep them away from anything flammable and never leave them unattended.
- Watching for downed lines: Southern California Edison recommends staying at least 100 feet away from fallen power lines and calling 911 to report them.
When the power comes back on:
- Check food and medications: Discard anything that has been above 40°F for more than two hours or shows signs of spoilage. Replace any temperature-sensitive medication unless the label says otherwise.
- Reconnect electronics gradually: Turn appliances back on one at a time to avoid overloading circuits.
The takeaway
While homeowners in at-risk areas must be prepared for wildfires, they also have to be ready for rolling blackouts during wildfire season.
That requires preparation and a plan you share with the family. Consider working on it together so everyone is familiar with the plan should a power outage hit your neighborhood.
OSHA Updates Its Inspection Targeting Plan
The Occupational Safety and Health Administration has overhauled its Site-Specific Targeting (SST) inspection program, marking a major shift in how the agency identifies and prioritizes workplaces for inspection.
Effective May 20, 2025, the new guidance applies to non-construction employers with 20 or more employees and significantly increases OSHA’s reliance on employer-reported injury and illness data submitted every year on Form 300A.
For business owners, especially those in high-risk industries like warehousing, transportation, distribution and health care, this shift brings the potential for more frequent and comprehensive inspections, even if their workplaces appear to be in compliance on the surface.
A deeper dive into OSHA’s new approach
Under the updated SST plan, OSHA will use Form 300A data from calendar years 2021 through 2023 to generate inspection lists. Employers may be selected for inspection based on:
- High DART (days away, restricted or transferred) rates in 2023
- Upward-trending DART rates over the three-year period
- Unusually low DART rates compared with industry averages (to verify data accuracy)
- Failure to submit Form 300A
The DART rate, which reflects the number and severity of injuries or illnesses affecting an employee’s ability to work, will play a central role in OSHA’s targeting decisions. Even employers who have submitted their data correctly and on time may find themselves flagged for inspection if their DART rates stand out, either for being too high or suspiciously low.
Compliance officers are instructed to assess hazards across the entire workplace, not just to focus on areas where injuries have occurred. This means that while an inspection may be triggered by injury rates in one part of your operation, inspectors are free to examine other areas and issue citations for unrelated violations they encounter.
What’s changed — and what hasn’t
The new guidance eliminates the previous requirement that OSHA conduct a partial inspection even if an establishment was mistakenly included on the inspection list.
At the same time, inspectors are now encouraged to conduct thorough walkthroughs of workplaces, potentially over multiple shifts, to evaluate exposure risks and overall safety conditions.
What hasn’t changed is the program’s reach: the SST still excludes construction, agriculture and maritime sectors but applies to all other industries. OSHA also continues to divide establishments into manufacturing and non-manufacturing categories, applying different thresholds for DART rate comparisons.
What employers should do now
Business owners should treat these changes as a call to action. Being proactive is key to avoiding costly inspections and penalties.
Here are some practical steps employers can take:
- Audit your OSHA 300 and 300A records: Ensure that only recordable incidents are reported. Avoid over-reporting non-recordable events that can inflate your DART rate and draw OSHA’s attention.
- Prepare for inspections: Designate a trained point person who will handle OSHA visits and make sure that any inspection stays within its legal scope.
- Know your rights: You are not obligated to allow an inspector on site without a warrant. Employers may ask OSHA to verify whether they are on the SST list before proceeding.
- Limit the first-day disclosure: Do not voluntarily turn over documents beyond your OSHA 300 logs, 300A summaries, 301 forms and relevant Safety Data Sheets on the first day of inspection.
- Stay inspection-ready: Conduct internal walkthroughs using the same criteria OSHA uses — especially focusing on high-hazard areas, employee exposures and recent injuries.
- Train employees: Educate your team, particularly non-supervisory staff, on what to expect during an OSHA visit and how to respond appropriately to inspector questions.
Review Your Property Coverage Limits as Construction Inflation Continues Apace
Rapidly rising commercial building construction costs could result in your facility being underinsured if you suffer a major loss and haven’t increased your insurance policy replacement cost limits lately.
Your policy has a maximum amount it will pay to rebuild your building, and that limit should reflect current construction costs. Otherwise, the policy may not be enough to pay for rebuilding after a total loss like a fire razing your business. And whatever the insurance doesn’t cover, you would have to pay out of pocket.
Construction costs
According to a report by Verisk, reconstruction costs in the U.S. increased by 5.2% from April 2024 to April 2025.
Those rising costs come on the heels of massive material price increases of 40% from 2020 to 2023 when supply chains were snarled.
Some prices have come down a little, but they are still mostly higher than before the pandemic.
With tariffs coming on many goods used in construction, we could be in for another round of construction cost increases.
Also, the construction industry faces a labor shortage, which has added to the cost of rebuilding and the time it takes to complete a project.
Escalating construction costs can extend rebuilding and repair timelines for properties.
Longer waits for materials or workforce can also increase compensation periods and can be a serious burden for a business that has lost access to its facility.
Many policies will also cover business interruption costs, which can be exacerbated by increased downtime at the damaged or destroyed facility.
Revisit your replacement cost
One of the critical parts of the claims settlement process is determining the cost to reconstruct a building to its original state with new materials and current labor rates. When these costs rise, so should your policy limits.
For example, a property owner bought insurance five years prior with a coverage cap of $1.5 million.
With escalating material and labor expenses, the present reconstruction price has soared to $1.8 million. Should a total loss occur, the insurance compensation would fall $300,000 short, forcing the occupier to pay the rest out of pocket.
What you can do
Proactive management of your insurance coverage ensures you have the necessary resources to recover from unforeseen events.
Review your policy — Work with us to conduct an annual policy check to ensure that your coverage matches current reconstruction expenses, averting monetary shortfalls.
Opt for a replacement cost policy — Choose a replacement cost value policy over actual cash value policy. The former offers better financial security. Actual cash value policies discount depreciation, usually covering less than the actual construction cost. Replacement cost value policies, despite being slightly costlier, guarantee reconstruction with contemporary materials at prevailing market rates, lessening personal expenses.
Expand your coverage — Ask us about expanded coverage options like:
- Extended replacement value coverage, which boosts dwelling limits if costs exceed standard coverage.
- Loss of use insurance, which aids in financing temporary housing if the property becomes uninhabitable.
- Ordinance or law insurance, which covers expenses for conforming to current building codes.
Supply-Chain Volatility Threatens Businesses
As the Trump administration returns to aggressive tariff strategies, business owners across the country are once again bracing for impact. On-again, off-again tariffs aimed at key trade partners like China, Mexico and Canada are creating a volatile environment where forecasting costs, securing materials and delivering products on time are increasingly difficult.
The unpredictability of these policies is creating ripple effects through global supply chains, threatening many businesses’ margins, operational stability and customer relationships.
Recent data show that U.S. companies have already lost more than $34 billion due to tariffs, whether from direct duties, lost sales or increased costs. Even businesses that don’t import directly from affected countries may face indirect impacts if their suppliers do.
A survey by Arthur J. Gallagher & Co. found that 90% of business owners are concerned about the effect tariffs are having on their operations — particularly in the form of:
- Supply chain disruptions due to changing routes and sourcing complications,
- Surging input costs that are difficult to pass on to customers,
- Manufacturing slowdowns driven by raw material delays or pricing volatility,
- Inventory hoarding to front-run new tariffs, which ties up working capital, and
- Dampened investment as companies adopt a wait-and-see approach.
What businesses can do
Large multinational corporations may have the resources to weather tariff swings — rerouting orders, renegotiating contracts and leveraging deep supplier networks. But for smaller businesses, limited buying power, narrower margins and lean supply chains mean there’s far less wiggle room.
Owners in industries like electronics, automotive parts, construction materials and apparel are especially exposed. Many of these businesses rely on components or raw materials from Asia, where even slight delays or cost increases can disrupt production and reduce profitability.
Despite the uncertainty, business owners can take proactive steps to reduce their exposure to tariff shocks and improve supply chain resilience:
- Audit your supply chain — Identify all products and components exposed to tariffs (directly or through suppliers) and calculate the potential financial impact.
- Diversify sourcing — Spread risk across multiple suppliers and consider partners in countries not subject to tariffs or have lower tariffs than those imposed on Chinese goods. Where possible, increase domestic sourcing to reduce exposure to geopolitical disruptions.
- Negotiate flexibly — Work with suppliers to explore cost-sharing options, volume-based discounts or adjusted contract terms to accommodate sudden tariff hikes.
- Use technology — Invest in supply chain and inventory management tools that help you track lead times, monitor pricing trends and adjust sourcing strategies in real time.
- Stay informed — Tariff regulations often appear in the Federal Register or through U.S. Customs announcements. Stay on top of updates and take part in comment periods to voice concerns before rules are finalized.
- Have a response plan — Meet with legal or financial advisors to build a tariff mitigation plan. This might include adjusting pricing models, altering stock keeping units or building a reserve of critical inventory.
Supply chain insurance
Many business owners wonder if supply chain disruption insurance could cover losses tied to tariffs. The answer is nuanced.
Standard supply chain policies typically cover physical interruptions — like natural disasters, factory fires or transportation breakdowns — that prevent a supplier from delivering goods. However, they usually do not cover economic disruptions, such as those caused by tariffs, trade sanctions or changes in government policy.
That said, some insurers are developing specialty coverage or endorsements that address trade disruption or political risk. These emerging trade disruption insurance policies may offer protection against losses stemming from sudden changes in tariff regimes or government-imposed import restrictions, even in the absence of physical loss or damage to the policyholder’s goods or assets.
However, these policies tend to be more common in large-scale international trade and are priced accordingly.
Cargo Theft Surges: Smarter Criminals and How to Stop Them
Cargo theft in the U.S. is climbing at an alarming pace. After spiking nearly 50% in 2024, incidents are already up another 22% in early 2025, according to a new report from supply chain visibility firm Overhaul.
Criminals, both organized groups and opportunistic individuals, are not only stealing more — they’re getting smarter and more aggressive in how they do it. For companies that move, store, buy or sell goods, the risks are mounting.
High-value items like electronics and everyday essentials such as food and beverages are being targeted at every stage of the supply chain, and no mode of transport is immune.
Here’s a look at what’s driving the rise, how theft methods are evolving and what companies can do now to reduce their exposure.
A growing crisis
Criminals are casting a wide net across industries, but some sectors are being hit particularly hard:
- Food and beverages made up 32% of thefts, often due to large volumes and minimal security.
- Electronics followed at 22%, prized for being compact and high in value.
- Alcohol and tobacco represented 10%, commonly stolen for black-market resale.
Notably, a single freight theft incident can now top $1 million in losses, which prompted a record-high 90% of shippers to purchase theft insurance in 2024.
More elaborate schemes
What sets the current cargo theft wave apart is the growing sophistication of criminal strategies.
Traditional methods like truck burglaries and hijackings are still common, but a new wave of tactics has emerged, often involving deception, impersonation and inside jobs.
Here are the most common and fastest-growing methods:
Deceptive pickups: Thieves impersonate legitimate drivers, often using forged documents or stolen identities to trick warehouses into releasing cargo.
Facility theft: Criminals target unattended or poorly secured warehouses and distribution centers, often at night or on weekends.
Pilferage: Instead of stealing full truckloads, thieves now remove parts of shipments slowly and discreetly over time — often without detection.
Hijackings and coerced stops: Some thieves use false emergencies or warnings to get drivers to pull over, then rob the truck.
Commercial burglaries: Thieves target storage sites such as truck yards or facilities near rail lines.
Last-mile theft: Criminals steal shipments during final delivery, often from parcel couriers.
Driver collusion: In some cases, drivers are paid to stage a hijacking or hand over goods, making background checks and employee vetting essential.
How companies can fight back
While no system is foolproof, companies can take steps to protect their supply chains and minimize losses. A layered security approach is key, combining physical infrastructure, technology and training. Consider:
Fortifying warehouses and yards — Most thefts happen when cargo is unattended. Securing your facilities with fencing, lighting, surveillance cameras, access control and intrusion detection systems can prevent both opportunistic and planned attacks.
Auditing your vulnerabilities — Regular threat assessments help identify weak spots before criminals do. Use external security experts to test your defenses and ensure your protocols are up to date.
Vetting and training your team — Background checks and strict hiring practices can prevent inside jobs. Make sure your employees know how to verify drivers, recognize suspicious activity and respond appropriately.
Leveraging real-time technology — Telematics, GPS tracking and video monitoring can help you monitor cargo in transit and respond quickly to threats. Visibility platforms also help spot early warning signs of theft, like route deviations or unscheduled stops.
Using secure protocols at every handoff — With impersonation and fake pickups rising, it’s critical to verify identities, use two-step authentication for pickups and document every transfer of goods thoroughly.
Treasury Dept Suspends Beneficial Ownership Reporting Rule
The U.S. Treasury Department has announced that it will not enforce a law requiring most businesses with fewer than 20 employees and less than $5 million in annual revenue to report ownership and control information to the federal government every year.
The Corporate Transparency Act required firms to file this information by Jan. 1, 2025, under the threat of a maximum civil penalty of $500 per day (up to $10,000) and up to two years in prison.
The Treasury Department said that it would not enforce any penalties or fines associated with the beneficial ownership information reporting rule on any companies that missed the Jan. 1 deadline. As well, it will not enforce penalties going forward for companies that fail to file their BOI report.
While the Trump administration cannot repeal the CTA, it is instead opting not to enforce it and plans to introduce new regulations that would essentially eliminate enforcement of the law for U.S. businesses.
The act explained
The CTA aimed to crack down on fraud, money laundering and terrorism funding that can run through anonymous business entities.
Under the act, businesses with 20 workers and less than $5 million in revenue were required to file reports identifying their “beneficial owners,” defined as individuals who own or control 25% or more of the equity interest of a company or who exercise “substantial control over its management or operations.”
There were some exemptions to the reporting requirement, including stock brokerages, banks and other financial institutions, insurance companies, accounting firms, public agencies and non-profits.
It’s estimated that the law affected some 32 million small businesses .
What’s next
The Treasury Department will issue a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. A “foreign reporting company” refers to any entity formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction.
Legal experts recommend that affected companies which have not yet filed an initial, updated or corrected report may consider waiting to file a BOI report until new guidance is issued by the Treasury Department, as no penalties or fines will be enforced for failing to file reports for now.
The department’s action may face legal challenges, or the present or a subsequent administration could restore the reporting requirements as the law remains on the books.
Businesses Struggle with Risk Protection Gaps
Nearly half of middle-market businesses feel unprepared for key threats despite implementing various risk management strategies, according to Nationwide Insurance’s latest “Agency Forward” survey.
The survey found that while 90% of businesses have formal risk management policies that are reviewed regularly, 21% lack a business continuity plan, leaving them exposed to potential disruptions that could severely impact their operations.
Additionally, 45% lack a disaster preparedness plan, and only half have a fleet safety program in place.
These shortfalls create vulnerabilities that could lead to financial and operational setbacks.
The survey found that companies allocate an average of 6% of their budgets to risk management and safety. Industries with higher risk exposure, such as construction and manufacturing, dedicate a larger share — 19% and 13%, respectively.
Key business concerns
Middle-market businesses identified their top risks over the next two years as:
- Costs and finances (42%),
- Economic and regulatory factors (40%), and
- Technological disruption (26%).
Economic downturns, supply chain disruptions, cyber-security threats and regulatory changes are the most pressing risk management priorities, each cited by 42% of respondents. However, only 5% of businesses listed natural disasters as a risk management priority, which could be a blind spot given recent climate-related disasters affecting various industries.
Leveraging technology
Technology is playing an increasingly important role in risk management, with 76% of surveyed businesses utilizing some form of digital solution.
Owners reported improved efficiency and compliance to regulations, enhanced data analysis and reporting, and better real-time monitoring of risks as a result of their technology use.
While only 11% have fully integrated technology into all aspects of risk management, 65% use it selectively.
The most common digital tools include:
- Cyber-security solutions (78%),
- Compliance and reporting software (67%), and
- Supply chain management software (58%).
However, technological adoption is not without challenges. Business owners cite the cost of safety measures (38%), maintenance of safety equipment and technology (31%) and keeping up with evolving safety standards (30%) as significant barriers to effective risk management.
How companies can better manage risk
To close these protection gaps and strengthen their resilience, mid-market businesses should consider the following strategies:
- Develop a comprehensive business continuity plan — Organizations without a continuity plan should work with risk management professionals to create one, ensuring they have a roadmap for responding to disruptions.
- Review the company’s compliance with regulations and laws — It’s important that your human resources team stays on top of regulations and legislation to ensure the organization doesn’t run afoul of them, which can result in penalties and fines.
- Enhance disaster preparedness — Natural disasters may be a low priority for many businesses, but proactive planning can prevent severe financial and operational consequences. Developing an emergency response plan can help mitigate potential damage.
- Analyze workplace accident data — Managing workplace safety is key to any company’s risk-management efforts. You should track incidents and thoroughly investigate each accident or near miss to find out what led to the event.
- Invest in technology for risk mitigation — Consider expanding your use of AI, predictive analytics and cloud-based risk management platforms to identify and address vulnerabilities before they become major issues.
- Regularly review and update risk management policies —As regulations and business risks evolve, you should regularly assess your policies to ensure they remain effective and aligned with industry best practices.
- Integrate risk management with business strategy — Risk management should not be seen as a separate function but as a core component of business success. Leaders should align their risk strategies with company objectives to ensure a seamless approach to resilience.