Identifying Theft In Sports Organizations And Need For Crime Insurance

One of our sports insurance clients wrote a fantastic article on how to prevent insider theft in youth sports organizations. Unfortunately, this insight was gained from his first hand experience and he now wishes that he had purchased crime insurance to go along with his Accident and General Liability coverages.

This article covers some new ground on the following topics:

* behavioral signs of the people who are most likely to steal (ex: living beyond means, unwilling to share duties)

* warning signs that theft may be occurring (ex: missing / unorganized records, sudden drop in revenue)

* overall protections that should be implemented (ex: avoid multiple board members who are closely related, insist of financial reporting at meetings)

*how to protect against the theft of cash from concessions and gate receipts (ex: always take beginning and ending inventory at concession stand, issue tickets or use counter)

* some statistics on the mindset of the embezzler (10% will steal no matter what)

For the 10% who will steal no matter what, all sports organizations definitely need Crime Insurance. We offer a $25,000 Sports Crime Insurance policy for $175 a year.

Click here for this fantastic article

Source: Anonymous

The Difference Between Crime And Equipment Insurance For Sports Organizations

Some administrators who make the insurance purchasing decisions for sports organizations are confused over the difference between Crime Insurance and Equipment Insurance.  They mistakenly believe that theft of equipment by outsiders or vandalism of equipment is a “crime” and as a result covered by a Crime Policy.  This is not correct.

Here is an easy way to distinquish the two policies:

Equipment Insurance = Loss to Sports Equipment Due To Fire, Wind, Vandalism, Theft, Etc.

Crime Insurance = Employee / Volunteer Theft Of Equipment Or Embezzlement of Funds.

Of course, the above explanation is an over simplification, but it is an easy way to distinquish the two policies.

Theft And Embezzlement And Crime Insurance Claims In Little League

The linked article below details recent theft and embezzlement cases in Little League Baseball, Inc. Our clients at Sadler Sports Insurance have experienced a similar uptick in Crime Insurance Claims over the past several years. In prior blogs, we outlined risk management controls to reduce the possibility of crime claims but there is not substitute for Crime Insurance, which provides important protection at a very reasonable cost. For most sports organizations, a $25,000 limit if offered at a premium of $175.

Source: Insurance Journal, July 5, 2011

League President Accused of Stealing $800,000

One of the most successful youth soccer programs in the nation is located in North Texas, and has now been dealt with perhaps its biggest loss in 15 years. The Solar Soccer Club has been defeated not by one of its opponents, but allegedly by a trusted former club president who parents say stole hundreds of thousands of dollars, leaving them scrambling to make a save. Parents say David Ringer siphoned off more than $800,000 from them over the last five years. He was the last man many of them would suspect.

As we have stated in previous blogs, a sports organization must implement procedures to protect against volunteer theft such as counter signatures on checks, bank statement reconciliation by someone not authorized to deposit or withdraw, and an annual financial audit by the board.

Source: Brett Shipp, WFAA, April 9, 2011.

Sports Organization Embezzlement Claims On The Rise

Sadler Sports & Recreation Insurance has studied its internal claims data under the Crime Policy from 1999 to 2010 and found that reported claims for its sports leagues have increased by 681% starting in 2009. Other blog postings have suggested that the bad economy is behind the sudden increase.

Now is the time for all sports organizations to implement risk management controls such as:

* requiring joint signature on checks

* requiring bank account and credit card reconciliation by someone not authorized to deposit or withdraw

  * conducting an annual audit of financial affairs and taking an equipment inventory

Source: Sadler Sports & Recreation Insurance

Safeguards Against Volunteer Theft In Sports Organizations

We have seen a trend of a growing number of theft occurrences against youth sports organizations by their trusted directors, officers, and other volunteers. Theft can take the form of embezzlement or the taking of equipment.  Evidence of such increasing rates of theft can be found by viewing the recent claims paid out by our insurance carriers as well as media accounts.

 The primary reasons for volunteer theft are dire financial circumstances often attributed to the poor economy and gambling addiction.

Youth sports organizations present the perfect opportunity for theft because most aren’t run as a true business as limited controls are in place. Furthermore, such organizations are often run by a small group of volunteers who have build up a great deal of trust among one another.

 To follow are some common sense controls that can help to limit volunteer embezzlement and theft of equipment:

 1. Require a countersignature on all checks or checks over a certain amount.

 2. Require bank statement reconciliation by someone who is not authorized to deposit or withdraw.

3. If you allow the use of credit or debit cards, make sure that the monthly statements are reviewed by someone who is not authorized to use the card.

4. Collect checks instead of cash during fundraisers.

5. Keep detailed inventory records of all equipment and require a log to be kept when equipment is assigned or checked out.

6. Create an audit committee to review all financial records, account statements, and to take an inventory of all equipment.

In addition to these safeguards, all sports organizations should carry a Crime Insurance policy that covers Employee Dishonesty, Forgery And Alteration, and Theft Of Money & Securities. Such policy should be specially endorsed to cover theft by employees and officers.