Worried About the Expense of Crime Insurance? Try Background Checks

Kevin Bachman

I’m always looking for ways to incorporate math into the rationale for a strong background screening program. This quote from a recent article about employee theft caught my eye, as it’s a sentiment we’ve echoed for years.

“A $100,000 loss to a $3 million company is more damaging than a $100,000 loss to a billion-dollar organization,” Mr. Karpp said.

Sounds like an endorsement of background checks, right?


It’s from an article discussing companies that buy “crime insurance.” A product I’m not familiar with but one I’m sure has fat profit margins which we could calculate with a spreadsheet and a few free hours. But not everyone is sold on it…

Lee McGriff, principal of McGriff-Williams Insurance, an independent insurance agency in Gainesville, Fla., said he has found that many small and midsize business owners are reluctant to buy crime coverage “because they trust their employees explicitly. But my experience has been that when this comes to roost, it’s usually the most trusted employee who is the culprit.”

Click here to read the full story.


We too run into same resistance mentioned in the article when companies think “that couldn’t happen here.” Oddly, the article didn’t even mention background checks which I like to think lower the probability of getting ripped off, incurring the emotional and financial costs, the marketplace embarrassment, the press coverage, and the real expense of the $10,000 deductible cited.

But it’s the price, and not really the product, that strikes me the most. A $100 million dollar company is cited as an example, so let’s look at the numbers.

A $10,000 deductible and a $3,000-$4,000 annual premium get $1,000,000 worth of coverage. If there’s a claim in year 5, that company has already spent nearly $20,000-$30,000. Even if there isn’t a claim, they’ve already paid several thousand dollars for that premium year after year after year.

But a technology company for instance, might spend $15,000 (cost estimated through conventional industry sales per employee ratios) screening their ENTIRE workforce.

Even if you still bought coverage, you save money because there’s a lower chance you pay that $10,000 deductible. You’ve done a better job managing risk. Then add the benefits of doing things better, lower turnover, making more money, etc. because you have a stronger team competing in the marketplace.

Our clients? They already know EmployeeScreenIQ provides them with “crime insurance.”

They’re called background checks.

Kevin Bachman
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Kevin Bachman

Senior Vice President of Operations at EmployeeScreenIQ
Kevin is responsible for creating strategy and setting long term goals to manage and optimize organizational workflow. Kevin ensures the company exceeds performance benchmarks by designing and implementing a robust set of analytics and metrics. As a member of the executive committee, he helps shape corporate strategy and sets the direction of key client initiatives. With 13 years industry experience, Kevin is a member of the National Association of Professional Background Screeners (NAPBS), previously serving on the best practices committee and co-chairing the Litigation Avoidance sub-committee.
Kevin Bachman
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  • Name Dean Weinhardt Sr.

    Good articleKevin. And that is without even mentioning the Negligent Hiring Doctrine if I read it correctly.