SEPTEMBER 2016 - ISSUE 4 - NUMBER 9 TEAM WORK Thank You, Broward LAAIA and Our Partners By CYNTHIA SCOTT Please let me take a minute to thank everyone for their participation in the 7th Annual Broward LAAIA Board Installation Gala. It was a fantastic event right from the start. Masters of Ceremony Rudy Valdez-Diaz and Al Men- growth of this unsurpassed organization. There are dez were both energetic and impressive. The program several great committees that can use your help. kicked off with a Please reach out if you are interested in becoming in- prosperity bless- volved. We want your participation! ing for the asso- ciation delivered September kicks by Mr. Henry, off with a three- the Culture Advi- part course to sor and Medicine earn or re-certify Man to the Sem- your CPIA desig- inole Tribe. Our nation. In addi- keynote speaker tion, the theme was Florida Chief of our Septem- Financial Officer Jeff Atwater, who spoke to our more ber membership than 225 guests about some of the current challeng- meeting is “Hire es we face today as an industry, including Insurance Slow and Fire Fast: The 6 Keys to a Winning Team.” Fraud, and recent changes to Workers Comp. Please refer to our newly redesigned website to see additional upcoming events. Our outgoing President, Robin Lewis recognized the incoming Thank you to our members and sponsors for starting and outgoing board members our upcoming year CONTINUED on PG. 2 for their dedication and service to the association. He remind- ed us that, as insurance profes- sionals, we serve an important role in society, and that we must continue to strive to be the best for our clients. I shared my vision for my term as president, including continuing to offer excellent professional growth and development classes. The new board members and I are committed to the off right. It's only going to get better. Teamwork Makes the Dream Work! The 2016/2017 officers and board of the Broward Chapter of LAAIA: Cynthia Scott, President Luis Ortega, President-Elect Daniel Barros, Vice President Karl Grace, Treasurer Christopher Dunham, Secretary Robin Lewis, Immediate Past President Rick Gibbs, Director Andrew Pappas, Director Jim Sullivan, Director The Latin American Associ- Angela Sheppard, Director ation of Insurance Agencies Brian Casey, Director Broward Chapter was found- Elena Cabrena, Company Liaison ed in September 2010. Al Mendez, Board of Counselors Representative Our Sponsors for the 7th Annual Broward LAAIA Board Installation Gala: The LAAIA strives to protect the rights of its members Ascendant Business Insurance Solutions (Platinum Sponsor) through education, informa- ETI Premium Finance (Gold Sponsor) tion, networking, and active People’s Trust Insurance Company (Gold Sponsor) participation in the political Wright Flood Insurance (Gold Sponsor) Mercury Insurance (Silver Sponsor) environment and communi- Federated National Insurance Company (Silver Sponsor) ty service for the benefit of Insurance House (Silver Sponsor) consumers. Security Premium Finance, Inc. (Silver Sponsor) Have you heard about our new Facebook group, avail- able for members only? It is fun, easy, and a great place for encouragement, enlightenment, and to cele- brate successes and events with each other. You can also bring your questions and/or seek help with situations or struggles you may be having. It’s another privilege of membership! If you are a Broward LAAIA member, then search for the Broward Chapter of LAAIA closed group in Facebook and click on JOIN. CONTINUED on PG. 2 Sawgrass Mutual Insurance Company (Bronze Sponsor) MacNeill Group (Bronze Sponsor) QQ Solutions (Bronze Sponsor) Florida Family Insurance (Bronze Sponsor) TypTap Insurance (Bronze Sponsor) Universal Property and Casualty Insurance Company (Bronze Sponsor) Olympus Insurance (Bronze Sponsor) Prepared Insurance Company (Bronze Sponsor) Florida Peninsula Insurance Company (Bronze Sponsor) Heritage Insurance (Bronze Sponsor) Market Scout (Bronze Sponsor) Bass Underwriters (Bronze Sponsor) Bankers Insurance Group (Bronze Sponsor) SeaCoast Underwriters, Inc. (Bronze Sponsor) Edison Insurance Group (Bronze Sponsor) Caliber Collision (Bronze Sponsor) Enterprise Holdings (Bronze Sponsor) Southern Oak Insurance (Bronze Sponsor) Selective Insurance Group, Inc. (General Sponsor) London Underwriters (General Sponsor) We’re looking forward to building on our relationship with each of this terrific partners, and I am looking forward to working with each of our members to make this a memorable and successful year. THE INFORMED AGENT 6 Things to Know About White Collar Crime By MELISSA HILLEBRAND The financial services industry faces the greatest threat of employee theft, with 17 percent of embez- zlement cases occurring at these organizations with less than 500 employees. In addition, the professional services industry has the whom you would least expect, Hiscox says. The com- highest median loss, with $615,101 stolen by employ- pany sources Jack Thurston, who identifies how em- ees, according to insurer Hiscox’s "2016 Embezzlement bezzlers justify their crimes: Study: A Report on White Collar Crime in America." • Pressure: An employee thinks he or she is in a If you think this only occurs at large organizations — dire financial CONTINUED on PG. 4 think again. Hiscox’s report says that small business- es with less than 150 employees were 10 times more likely to be victimized by fraud than those with 250- 500 employees. The study analyzes employee theft cases that were active in the U.S. federal court system in 2015, of companies that employ less than 500 people, which represents 69 percent of all federal cases. ***SAVE THE DATE*** From the types of industries most afflicted by employ- ee fraud to mitigation tips, here's what you need to On Wednesday, September 21, 2016, join know about employee embezzlement: your Broward LAAIA chapter at the Planta- tion Preserve Golf Course & Club (7050 WHY GOOD EMPLOYEES GO BAD West Broward Blvd, Plantation, FL) for the Perpetrators are often smart, well-liked, and those Member Connection Dinner/Meeting. situation that can only be relieved by addition- occurred 5 percent of the time in this industry. The al funds. This could be from gambling, bad in- second highest loss ($600,000) is found in the health- vestments or business losses, medical expens- care industry, where 65 percent of the fraud cases are es or debt. committed by managers. Hiscox found that all health- • Opportunity: Senior employees are more likely care embezzlement occurred at companies with less to have access to secure files, which offers op- than 250 employees. portunity to “fix the books” and cover up crimes. • Capability: Perpetrators must have the skill The real estate and construction industry was the only and knowledge to do so. one studied where owners committed fraud multiple • Rationalization: The theft often begins as a times. Owners are responsible for 11 percent of the “loan,” which the employee intends to pay cases in this industry with a median loss of nearly back Embezzlers convince themselves that $350,000. Overall, the median loss in real estate and they are taking care of their families, feel un- construction is $416,000. derpaid or say they are not treated well. • Related: Employee fraud: 6 steps to substanti- 5 MOST COMMON EMBEZZLEMENT SCHEMES ating your claim and recovering losses. • Outright funds theft (36 percent of cases): Oc- THE CRIMINAL NEXT DOOR curs when an employee takes cash or bank de- posits, or when an employee transfers money Embezzlers are most likely to be middle-age women into their own account. who work in senior bookkeeper positions, according • Check fraud (26 percent): When an employee to Hiscox. The study says the median age of perpe- alters or forges checks, making the checks pay- trators is 49 years old, and females able to themselves. represent 56% of those that com- • Credit card fraud (12 percent): mit this type of crime. Bookkeepers, Occurs when an employee fraudu- the most common job by those who lently uses, authorizes or creates an commit theft, represent 11 percent employer credit or debit card. of all cases, followed by managers at • Vendor invoicing and false 10 percent. billing (10 percent): Occurs when an employee creates fictitious invoices DOES SIZE MATTER? from made-up companies or inflates invoices from actual vendors. More than 80 percent of thefts oc- • Payroll fraud (7 percent): curred at companies with less than 150 employees, When an employee uses the payroll system to Hiscox says, with just under half of these crimes com- divert funds to themselves or family members. mitted at organizations with less than 25 employees. Of the five schemes, vendor fraud, by far, has the “Though it may seem counter-intuitive, smaller orga- highest median loss at $1.33 million. Coming in sec- nizations with tight-knit workforces are particularly ond is check fraud, with a median loss of $361,000. vulnerable precisely because employees are trusted and empowered,” the study reports. HISCOX’S BEST PRACTICES TO PREVENT FRAUD U.S. companies with as many as 500 employees expe- • Never give a single employee end-to-end re- rienced a median loss of $341,710 per year because of sponsibility for accounting or accounts pay- employee theft. able. Implement checks and balances. • Pay attention to employee lifestyles, especial- WHO'S WATCHING THE MANAGERS? ly any extreme changes. • Conduct lawful background checks on em- In 75 percent of the studied industries, Hiscox says ployees who handle money. managers are more likely than rank-and-file employ- • Educate employees about fraud detection ees to embezzle. and have them sign a code of ethics. • Promote a culture of trustworthiness For the second year in a row, the financial services in- and integrity. dustry has the highest number of fraud cases (17 per- • Send bank statements to the home address of cent). However, it is also one of two industries (the the business owner, who should also review other is professional services) where more employees any cancelled checks that come directly from than managers committed theft.