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Business Operations

Sound the alarm

October 11, 2010
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When navigating the hurdles and challenges of a recession, most operators focus on making payroll, maintaining volumes and luring in new customers. What they might not consider is that tough times can mean more crimes.

A recent survey of 233 police agencies conducted by the Police Executive Research Forum found 44 percent of those forces experienced a rise in criminal activity that they attributed to the economy’s nosedive. Although experts stop just short of calling the increase a crime wave, sociologists note that crime has intensified during every recession since the late 1950s.

A good operator has a game plan for reducing expenses, refocusing the company’s marketing, as well as upgrading to more efficient equipment during an economic downturn; so why not crime prevention? As the nation’s unemployment rate nears 10 percent, it’s time operators get serious about protecting their businesses, their customers and their employees.

A true crime story
Dennis Ramsey has been washing cars for over 30 years now, so when his express exterior wash in Columbus, OH, was hit this past May, he thought he was prepared. He had cameras, an alarm system, and locked doors.

But despite his three decades of experience and surveillance technology, Ramsey said he could have done better. First things first, the alarm at Klean-A-Kar Express wasn’t set that night.

“I’ve gotten a little lazy,” Ramsey sheepishly admitted. “We didn’t set the alarm, and I’m kind of embarrassed about that. They were in the building for a half hour. They managed to clean the carwash out of everything; our laptop, everything.”

Although Ramsey’s first line of defense failed, his second worked beautifully. The 22 security cameras installed at the wash captured plenty of images on the three men who robbed the wash, and that video was shown on local TV and spotlighted as part of the local CrimeStoppers segment.

“They obviously knew they were on video because they kept their hats down low and their t-shirts pulled over their faces,” Ramsey said, “but I got a lot of good video on them and it was very helpful to the police.”

Ramsey said his local law enforcement agency is relying on clues from the distinctive clothing the suspects were wearing and help from the community. Although no suspects have been apprehended, Ramsey is hopeful the video may lead to an arrest. “We wouldn’t even have a chance if we didn’t have the video,” Ramsey said.

Another thing Ramsey did right? He kept his hard drive locked up. Ramsey urged other operators to do the same, or keep their hard drive in a different location separate from their computers. This way, vital information in regards to operation of the carwash is saved and prevents downtime related to the crime.

Lessons learned
Ramsey considered this latest robbery a real learning experience. For instance, he urged carwash operators to reconsider locking every door in the building.

“I’ve been doing this for about 32 years, and I was always under the impression to lock every single door, making it harder for them to get one place to another,” Ramsey explained.

But according to the police who responded to the robbery, Ramsey would have been better off setting his alarm that night and leaving some interior doors unlocked. This way, damage to the building would be limited and police would have responded to the alarm.

Ramsey said law enforcement advised him to lock the exterior door only and have his alarm fixed, which he did. Two weeks later, the wash was broken into again – only this time, the alarm went off and the suspects escaped with no loot, and causing no damage to the wash.

“The alarm is what really scares them off,” Ramsey said. Although there are plenty of options, his outside doors are armed with magnetic contactors. He said operators should be aware of the wet, damp environment a carwash poses to the alarm system and choose one that will limit false alarms. A glass breaking or noise system is best, he advised.

Cameras are also a must, according to Ramsey. “I would not do without them; not for your health, or your customers,” he said. Klean-A-Kar has 22 cameras; 16 monitor operations, offices and vacuum areas. An additional six are focused on the wash process where they have helped Ramsey avoid frivolous damage claims.

“Our claims for damage have gone down dramatically with the camera arch,” Ramsey said. “When we didn’t have the arch, we probably had one claim a month. Now it’s a rarity. Everybody’s wise to it.”

Ramsey said he wouldn’t operate a wash today without cameras or an alarm system. “It’s really a lifetime investment, so you shouldn’t look at is an ROI (return on investment) opportunity,” Ramsey said. “It’s a lot of money upfront, but it really helps.”


Preventing employee theft
By Scott Brothers, CIC

When you read the title of this article, what came to mind — a thief coming onto your premises with the intent to take money or property by force, or possibly a newscaster telling about an individual being harmed by an intruder who was caught stealing their property? Many of you may have experienced this first hand and are concerned about protecting yourself against damages related to crime.

Your agent may have told you that you need coverage for property and money in a special form policy which includes theft, because it is not excluded — or a Business Owners Policy (BOP) form, which also provides this protection. If you followed your agent’s advice, congratulations, you can rest assured you have insurance coverage for this type of crime.

However, there is another crime that you may not have considered that is a real threat to your business’ financial well-being — employee theft.

The U. S. Chamber of Commerce estimates that 75 percent of all employees steal at least once, and half of these same employees steal again... and again. The Chamber also reports that one of every three business failures are the direct result of employee theft. It’s naive to think that employee theft will not happen to you. While employee theft may be only as serious as the swiping of a stapler or a bottle of Liquid Paper®, the stealing of money, office supplies and office equipment can become quite a serious problem for your business if it is not monitored and kept to a minimum.

“Employee crime is one of the biggest and costliest problems facing private businesses today,” said Lisa McGee, a private company customer group manager for Chubb Specialty Insurance.

Can you purchase insurance protection for damages caused from employee theft? The answer is yes, you can. Check with your insurance adviser to determine the limits available and the premiums at various deductible levels.

One of the best ways to limit your damages from employee theft is to:
1. Expect it; and
2. Prevent it.

Based on the statistics and a number of other reasons, it’s important you realize that your business is not exempt from this exposure to loss. Some of the most trusted employees are often times the ones most likely to be involved in employee theft. It may take the form of stealing company property, corruption schemes and/or accounting trickery. Statistics show that the average tenure of employment of those caught for theft from their employer is nine years. It is thought that long-term employees decide they are under paid or unappreciated and therefore feel justified stealing from their employer.

Here are a few common sense ideas and good business practices you can implement to prevent damages from crime:

  1. Have a system in place to oversee expense reports and check signing. In general, it is a good idea that two people (preferably not from the same department) sign off on approvals in the event someone is trying to bilk the company.
  2. If you have equipment such as cell phones, pagers or computers that employees use for their daily activities, you need policies clearly spelled out, and signed agreements that state when they take the equipment they understand it is company property and they must not be negligent with it or let others use it.
  3. Know who works for you with pre-employment background screenings. Risk management statistics show that more than 40 million Americans used fraudulent resumes or false statements on job applications to obtain a job. These same screens on pre-employment and current employees revealed 75 percent had an undisclosed criminal history.
  4. Use of security cameras allows you to covertly document employee theft and overtly for customer theft and fraud. The use of investigative and security services will further deter theft and, of course, make certain an investigation takes place any time a theft is suspected.
  5. When a theft has been proven, make an example of any one involved. A police report is mandatory anytime you have an insured loss, and being willing to prosecute to the fullest extent of the law will serve as a deterrent to others in the future who may be tempted to steal from your business.
  6. Never count any employee out as a suspect. Smart money says it will be someone you wouldn’t expect to commit a crime against you or your business.

Insuring yourself against crime is far more serious than just buying insurance for known exposures. In essence, the numbers tell the story, and your effort to prevent crimes and thereby reduce losses is an effective way to manage a profitable business.

Even with the best laid plans it is still possible you may incur a loss. Count on your insurance adviser to review your current insurance program and explain other coverages or limits that will help you take the financial bite out of crime.


Scott Brothers is president and CEO of Joplin, Missouri-based The Insurancenter. The Insurancenter has been insuring the car care industry since 1986, and is the largest writer of car wash insurance nationwide.

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