Exam 2 Part 1: Crime

Question 1

What percentage of annual revenues to corporations lose due to fraud and abuse?

Answer 1

8%

Question 2

What percentage of private companies had an EE steal company funds, equipment, inventory or merchandise during the past 5 years

Answer 2

40%

Question 3

Average value of Stolen Assets by an EE

Answer 3

$400,306

Question 4

Who is the most common perpetrator in coprorate crime and how often?

Answer 4

EE

4 out of every 5 times

Question 5

Do most perpetrators of corporate crime have a criminal history?

Answer 5

No

3 in 5 have no prior criminal history

Question 6

What percentag of corporate crime shemes are carried out by managemen?

Answer 6

40%

2 in 5

Question 7

What is Employee Theft Coverage for?

Answer 7

Direct loss of money, sercurities or other property

Question 8

What crimes are included in Employee Theft Coverage?

Answer 8

Theft or Forgery

Question 9

Who does EE Theft Coverage Cover?

Answer 9

An EE acting alone or in collusion with another person (or another EE)

Question 10

How is an employee defined in EE Theft Coverage?

Answer 10

• Currently on payroll or employment eneded in the last thirty days
• Temporary EEs are included
• Somone under the control and direction of insured (volunteer)
• Directors, Managers, Trustees

Question 11

EE Theft Exclusion

Answer 11

1) Partner Theft
- Because owner (Shared Partner Ship)
- If theft or forgery by partner would have resulted in a covered loss
2) No Coverage For loss Caused by an EE after the Inusred:
- Becuomes aware of fraudulent or dishonest act during employment
- Becomes aware of significant fraudulent or dishonest act committed prior to employment: (Does Not Say Convicted)
- Or if prior coverage for that individual has been cancelled

Question 12

Amount Paid for Partner Theft

Answer 12

Amount paid will be the loss amount exceeding the partner’s ownership % x insured’s total assets determined as of day immediately preceeding the date of discovery (Partner Share = Deductible)
- Or may be excluded in full

Question 13

Forgery or Alternation Coverage

Answer 13

Direct loss resulting from fogery or alteration of a check, draft, promissory note or similar written promise

Question 14

Forgery Definition

Answer 14

• Signing of another natural person’s name with the intent to deceive
• Includes handritten signature or one done mechanically or electronically
• Does not mean a signature that includes one’s own name with or without authority

Question 15

Requirements For Computer Fraud

Answer 15

1) An authorized:
- Entry into or deletion of data from a computer system
- Change to date elements or program logic of a computer system
2) Resulting from fraudulent activities
3) Directing an institution to transfer, pay, or deliver money or securities from any account maintained by the insured without insured’s knowledge or consent

Question 16

Money Orders & Counterfeit Currency Fraud Covered Losses

Answer 16

1) Loss from the good faith acceptance in exchange for merchandise, money or services of any money order
2) Loss from the good faith acceptance of counterfeit U.S. paper currency in the regular course of business

Question 17

Client or Third Party Coverage

Answer 17

• Direct loss of money, securities or property sustained by a client
• Resulting from theft or forgery
• Can include acts committed by EE
• May get coverage even without theft coverage

Question 18

What Acts Are Excluded From Client or Third Party Coverage

Answer 18

Acts of EEs when committed in collusion with client and/or EEs

Question 19

How Is a Client Defined Under Client or Third Party Coverage

Answer 19

An entity for whom you perform services under a written agreement