Insurance executive wonders what there was in the way of coverage for that $500,000 that was stolen

Crime 100By Staff

August 8th, 2020



“Why” asks a retired insurance broker with decades of commercial insurance experience ” is no one questioning if an insurance payment has been made or is likely to be made. These types of insurance claims (those made under what in the industry are referred to as “crime” policies) are generally settled very, very quickly.”

“I’m guessing” said the insurance expert, “that  the City did not purchase “social engineering fraud” (SEF) coverage as part of its crime policy. That in itself is a “crime”.

“As an insurance broker for 47 years dealing only with business/commercial clients, I would never have allowed a client to firstly, not buy a crime insurance policy and, secondly, not to have the SEF extension included.”

Members of Burlington city council know what the city’s insurance coverage was and they know what the city has been able to recover, if anything.

Council will have been briefed by Nancy Shea Nicol, the City Solicitor, or a member of her staff.   This Council has picked up some of the unfortunate habits that many city councils take on – they say as little as possible.

We will have to wait for the trial to learn the full story.

Related news stories:

$500,000n found to be missing from the city coffers

Police make arrests

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3 comments to Insurance executive wonders what there was in the way of coverage for that $500,000 that was stolen

  • david barker


    A standard “Crime” insurance policy has numerous “insuring agreements”. Each one describes a type of theft from the policyholder that is covered. Those insuring agreements usually include:-

    • Employee theft of client property
    • Loss of money, securities and other property on your premises or banking premises
    • Loss of money, securities and other property while in transit
    • Loss from acceptance of unpaid money orders and counterfeit money (including coins and travelers cheques)
    • Loss from forgery or alteration of covered instruments
    • Loss from computer crime (including computer fraud and computer program and electronic data restoration expense)
    • Loss from funds transfer fraud

    The type of fraud suffered by the City is known as Social Engineering Fraud (SEF) and would likely fall within the Loss from Computer Crime insuring agreement. The coverage specifically addresses incidents where an employee has been tricked into willingly parting with funds.

    As respects a deductible being applicable, some of the insuring agreements do not have any deductible applicable. An SEF type claim would likely have a deductible in the range of $10,000 to $50,000.

    Sure if a policyholder makes a claim there is a possibility the filling term the premium might go up. However generally insurance companies in this space do not penalize a policyholder for having a claim, if the claim is fortuitous and not a frequent event. The purpose of insurance is to pay for fortuitous losses but it us not there to support poor risk management. So when a policyholder gas a loss it must decide is the magnitude of the loss such that it’s too big a hit to the bottom line to be self absorbed. I suggest $500,000 is of a size that it presents too big a hit to the City’s bottom line.

  • Alan Harrington

    Fair question as to whether the city is insured for theft.

    But would the insurance company pay out anything if they could prove the city “gave the $500K away” in error.

    And wouldn’t the payout be less any deductible.
    And wouldn’t the city’s insurance rates go up immediately?

    And just because someone is arrested – does not mean they need to return any “alleged stolen funds”.

    We can be quite certain the three fellows are not walking around with “500 large” in their pockets. That money (whatever is left of it) is probably in an offshore account or in the hands of a family member or who knows???

    It would need to be proven in court that the three are guilty – and what amount would need to be paid back (if any) in the sentencing.

    If the funds were insured, then any return of cash would go to the insurance company.

    Let’s hope there is a satisfactory conclusion to the issue.

  • Rob

    Good question.

    Someone at city hall must have a ready, short answer.