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Risks and insurance
Abstract
This paper will discuss what money insurance is about and the benefits provided from being insured. In this regard, this paper will study on the crimes committed while money is in transit and in premises. The act of forcible and violent entry upon premises due to armed or unarmed robbery with visible evidence will ensure that the insured is compensated. The increasing crime rate in Malaysia will also be studied from the view of unemployment rate. The conclusion drawn is that money insurance would be able to provide financial support and security protection for the insured. Through this paper, we hope to bring more clarity on money insurance policy to our readers.
Introduction
Money insurance covers money that has been stolen, destroyed, or damaged. In short, money insurance can be described as a policy that compensates the insured from money loss. Regardless of whether the person in charge is on his or her way to the bank to deposit the business income for the afternoon or if he or she wants to keep the money at the business premise itself, having money insurance could spare the business owner from startling financial loss in case of burglary or robbery.
Money includes cash, bank, and currency notes, cheques (other than blank or partially completed), checks for passengers, drafts for banks, postal orders, money orders, postage stamps, unexpired units on franking machines, trade stamps, gift coupons, bills of trade, travel fares, calling cards, credit cards and charges. Cover will be up to the maximum of sums covered. Certain restrictions will apply including the maximum amount to be stored in different safe/fortified rooms and the maximum amount to be transported per transit.
There are a few main situations where the loss can be compensated or covered by the insurance company. The first situation is where the cover is available for money taken from the bank to the covered premises for payment of salaries, wages, and other profits or for minor cash in direct transit. Next, cash other than that was mentioned in the first situation in the personal possession of the insured or the insured’s approved employees while in direct transit between the premises and the bank or post office. The third situation can be covered when money other than that mentioned in first and second situations obtained by and in the personal possession of the insured or the insured’s approved employees while in transit to the premises or bank within 48 hours of collection.
There are also many exclusions that exists in this policy where this policy such as it is not liable for an any shortages due to mistakes or inaccuracies. The loss of money and/or property destruction assigned to anyone other than the policy owner, the authorized agent, or the authorized employees of the policy owner. Next, loss of money, if the policyholder or his or her designated representative/employee are involved as principal or accessory, and damage to property. Apart from that, loss due to fraud or deceit of the cash carrier who is designated representative/employee of the policy owner who happens while in transit and discovered within 48 hours. Damage incurred directly or indirectly by or as a result of war and battle, invasion, foreign enemy act, warfare (whether declared war or not), civil war, uprising and revolt, and many more.
The few required information that must give to the insurance company are estimated annual cash transfers where the regulation can be changed at the end of the policy duration to reflect actual transactions and descriptions of any safes or strongrooms. This includes information of the supplier, model, weight, and dimensions of the safe or strongrooms.
Literature review
Money insurance promotes the policy of having your back when you are travelling to the bank with the earnings of the day. The cash-in-transit industry transports banknotes and other valuable goods between customers, especially between financial organizations, and are constantly exposed to risks. It is estimated that more than £500 billion is being transported each year in the United Kingdom. Some robberies are able to attract huge media coverage for example, the 300kg of gold robbed in Italy and, in that same month, a ¬50 million robbery in Belgium (L. Talarico, 2015).
These robberies on cash-in-transit couriers could be a source of funding for large organized crime. The British Security Industry Association showed recent statistics of attacks against cash-in-transit couriers and it is a growing problem throughout the world (British Security Industry Association, 2013). It is well-known that these vans are an attractive target because the results are lucrative. Therefore, these whales attract more professional robbery attacks (Gill, 2001).
Cash-in-transit guards have to work under dangerous and stressful conditions transporting valuable goods, with the risk increasing in South Africa. They may suffer burnout, where they are emotionally and physically exhausted, due to prolonged stress and lack of social support (Poisat, 2014). Cash volumes have doubled since 2003, with as much as 60% payments being paid in cash (Focus, 2012). Cash-in-transit services increased while these financial organizations and cash-in-transit institutions have become targets of violent and confrontational robberies. These crimes include violent attacks on the vehicles and professional personnel, according to the 2012 Overseas Security Advisory Councils (OSAC) South African Crime and Safety Report.
Besides being a tempting target for robbers, the situation where the money would be provided to ATMs with fixed locations, which is often in public places, the risk of being attacked is higher. In the Republic of Macedonia, the robbers often use firearms of pistols and automatic rifles, and cars (Babanoski).
There is another paper showing robberies of service stations and pharmacies in Australia. Service stations in Australia are what we call gas stations and they are open for long hours with minimal staffing during their night shift. The fact that they also keep cash on the premises is also another contributing factor for robbery or theft (Rotherham, 1999).
On the other hand, pharmacies are targeted because they sell drugs and have stores of it kept on premises (Rotherham, 1999). It is discovered that 80% of robberies against service stations had only one staff member on shift while 52% of pharmacy robberies had two or more staff members on duty. However, the paper concluded that service stations have higher risk of being robbed compared to pharmacies because 80%of recorded robberies are armed (Taylor, 2002). Although there are different types of property taken during robbery incidents, the most common report of property taken was cash; in approximately 6 out of 10 incidents (L Smith, 2007).
(D’Alessio, 1990) studied a demographic of 30 randomly sampled convenience stores in Leon County, Florida. The study showed that environmental factors are not the main indicators but the degree of social disorganization, parking lot size, operating hours, and whether the store provides gasoline service. These factors are significant in determining whether a store would be robbed. Majority of robbery cases involved confrontation between a victim and several unknown offenders (Cook, 1983). Victims are more likely to sustain physical injuries when the offenders are unarmed because the victims are less likely to yield (Hindelang, 1978). However, offenders in most convenience store robberies are armed. As a result, the probability of the victim being injured is reduced (Crow, 1975).
South Africa, on the other hand, had experienced an increase in armed robbery and crime rate. From studying a sample of 39 victims who were assaulted, personal neglect, poor security measures, or ignorance by employees created opportunities for armed robbers (Pretorius, 2008). Among other factors, the increase in crime rates is also caused by factors of high unemployment rate and social problems associated with poverty (National plan of action: roll back xenophobia campaign, 2000). Besides that, illegal immigrants, with millions estimated, from war-torn African countries have several numbers of cases responsible for the increase in armed robbery and assault.
Findings
Money insurance can be defined as insurance provides coverage against loss or damage to a business premises (such as cash or currency) in the event of misfortune. Meanwhile, there are still some conditions that are not coverage under this insurance, such as the losses arising by the dishonesty of insured holder, loss from an unattended vehicle, the war and the act of terrorism and etc. The insured can be held liable for its losses without violating any of the conditions in the policy agreement.
Nowadays, the public security has become complicated and unsecured. The unemployment rate in Malaysia was raise to 3.3% from October 2019 to December 2019, thus it means people with jobless is increase outside there (Malaysia Unemployment Rate, 2019). Individual will typically be facing financial problems because of high expenditures but with no income. This situation may lead people to do something illegal, such as robbery and theft, to get money. According to the studies from Numbeo, figure 1.0 showed level of crime is listed with a high amount of 62.40%, and the safety rate of walking alone is very low. The study by (Tang, 2007) found that inflation and unemployment rates are important factors of crime in the United States. The study states that even though unemployment rate is negatively related to crime rate in the short run, it has a positive relationship in the long run.
From the international standard of criminal cases, Malaysia is considered relatively low and manageable compared to countries of high crime rates like Mexico and Estonia. However, the increasing crime rates in Malaysia created an urgency and public awareness on this topic. Besides the increasing crime rate trend, it is reported that the Royal Malaysian Police (RMP) in understaffed and underequipped and are also inefficiently distributed among Malaysian States (Ohashi, 2004).
Figure 1.1: Crime rates in Malaysia (Source: NUMBEO.com)
Beyond that, the figure 1.2 showed that Kuala Lumpur range the highest crime rate among the states in Malaysia. Nevertheless, figure 1.3 shows the largest type of crime is unarmed robbery, which is the act of force or assault, to take money from the victims, without using any dangerous weapon. Even though the robber took their money without using any weapon, the victim will still get injured from the incident and lose their valuables things because they are less likely to yield to an unarmed robber. For example, when people withdraw their funds from financial institutions, they might be robbed inside or outside the premises and it may cause the victims to loss their money and get injured.
Figure 1.2 Average index crime rate per 100, 000 of the population, by state, 2010-2017 (Source: MOHA and DOS (Authors calcualtion))
Figure 1.3 Total number of violent crime cases reported per 100,000 of the population, in KL and Selangor, by type, 2010-2017
(Source: MOHA and DOS (Authors calcualtion))
Besides that, robbery will not only occur on individual, but company or businesses also. According to the studies from NACS, the number of robberies in convenience store rose 6.7% from year 2015 to 2016 (FBI Releases 2016 Crime Statistics, 2017). Along with the report from NACS, it shows that the business premises such as convenience stores are often targeted by robbers and thus, the business holder will face a huge loss if their store gets robbed.
In order to reduce the potential losses from event of robbery or theft, insurance is a best way to cover the lost amount from the incident occurred. As insurance company provide financial support and security protection for the insured to reduce their losses from accident. In other words, insurance is able to manage the risk exposure and transfer the cost of potential losses to the insurance company. This is because insurance companies play the role of pooling money and pay-outs when there is a claim from the insured for their losses. Moreover, purchasing appropriate insurance policies will effectively help to ensure loss and health recovery in the event of an accident. Since businesses and individuals are likely to be robbed nowadays, it is a wise and practical choice to be insured. They only need to pay a certain monthly fee or insurance premium in exchange for lower costs in the event of misfortune. As a conclusion, the money insurance policy is strongly recommended, as it covers the cash lost and compensates the insured from robbery cases also (Money Insurance, 2020).
Conclusion
Insurance is the best way to make up for the amount lost after an accident. Money insurance can provide protection losses of money during in transit between bank, insureds premises, and other specific locations due to robbery, theft, or other accidental causes. It also provides protection for money losses in business, vaults or safe. To avoid this risk, you need to have a special ‘money’ insurance. Money insurance can protect bank drafts, checks, postal and payment slips that are stored securely or in transit. Losses from robbery or accidents will be compensated.
There are a few main situations where the loss can be compensated or covered by the insurance company. However, there are some widespread exclusions. For example, such plans do not cover loss of money due to mistakes or negligence, employee fraud, loss or damages of money on the way to the mailing, or personal storage for more than 48 hours by authorized employees. Some insurance company provides financial support and security protection for the insured to reduce their losses from an unexpected accident.
References
- Babanoski, K. I. (n.d.). Criminalistics and Operative Aspects of the Attacks on the Cash In Transit Vehicles in the Republic of Macedonia. 21-36.
- Cook, P. (1983). Robbery in the United States: An Analysis of Recent Trends and Patterns. Illinois: U.S. Dept. of Justice, National Institute of Justice.
- Crime Trends and Patterns in Malaysia. (2019, August). Retrieved from Kyoto Review of Southeast Asia: https://kyotoreview.org/trendsetters/crime-trends-and-patterns-in-malaysia/
- Crow, W. B. (1975). Robbery Deterrence: An Applied Behavioral Science Demonstration. California: Western Behavioral Science Institute.
- D’Alessio, S. S. (1990). A Crime of Convenience: The Environment and Convenience Store Robbery. Environmental Design Research Association: Sage Publications.
- FBI Releases 2016 Crime Statistics. (2017, September 26). Retrieved from NACS: https://www.convenience.org/Media/Daily/2017/Sept/ND0926175
- Focus, S. (2012). Where cash is king, holistic security solutions are key. Security Focus.
- Gill, M. (2001). The Craft of Robbers of Cash-in-transit Vans: Crime Faciliators and the Entrepreneurial Approach. International Journal of the Sociology of Law, 277-291.
- Hindelang, M. J. (1978). Victims of Personal crime: An Empirical Foundation for a Theory of Personal Victimization. Ballinger Publishing Co.
- L Smith, K. D. (2007). Armed robbery in Australia: 2007 National Armed Robbery Monitoring Program annual report. Canberra: Australian Institute of Criminology .
- L. Talarico, K. S. (2015). Metaheuristics for the Risk-constrained Cash-in-Transit Vehicle Routing Problem. European jourrnal of operational research, 457-470.
- Malaysia Unemployment Rate. (2019). Retrieved from CEIC: https://www.ceicdata.com/en/indicator/malaysia/unemployment-rate
- Money Insurance. (2020). Retrieved from PIAM: http://www.piam.org.my/consumer/general-insurance-products/commercial-lines/money/
- National plan of action: roll back xenophobia campaign. (2000). Retrieved from South African Human Rights Commission: https://www.sahrc.org.za/index.php
- Ohashi, Y. (2004). Asia Times Online. Retrieved January 2008, from Malaysia: More police and still more crime: http://www.atimes.com/atimes/
- Poisat, P. M. (2014). Social support key to cash-in-transit guards’ psychological wellbeing. Problems and Perspectives in Management, 312-318.
- Pretorius, R. (2008). Armed Robbery, Violent Assault and Perceptions of Personal Insecurity and Society as a Risk. Acta Criminologica: Southern African Journal of Criminology, 81-91.
- Rotherham, S. (1999). Employers told to fix up security or else. Security Australia, 18-19.
- Tang, C. L. (2007). Will inflation increase crime rate? New evidence from bounds and modified Wald tests. Global Crime, 311-323.
- Taylor, N. (2002). Robbery Against Service Stations and Pharmacies: Recent Trends. Canberra: Australian Institute of Criminology.
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