Employee Fraud Insurance or Fidelity Guarantee insures your business against loss of money, negotiable instruments or goods belonging to the business – resulting from an act of fraud committed by an employee.
The cover is in effect if:
It is an employee who has committed the fraud
The whole of the loss occurred in Australia
The fraud is discovered during the period of insurance; generally within a 3 month timeframe of it occurring.
The incident is reported to the police and/or prosecuted.
What is Fraud or Fidelity insurance?
Financial losses incurred by workplace crime are not typically covered by property insurance policies. If cover for this risk is required, then fraud, crime or fidelity insurance can be purchased.
Fraud or fidelity insurance is an insurance policy that protects against financial loss from an employee’s or an office holder’s dishonesty.
Crime insurance protects against financial loss whether the attack has come from inside the organisation or has been committed by a third party such as a burglar or computer hacker.
Fidelity insurance can be a standalone policy or can be included as part of Business Pack covers.
Guarding Against Fraud
Screening job applicants thoroughly;
Creating a positive work environment, where employees feel valued;
Making it well known to employees that thieves will be caught;
Being aware of staff having financial difficulties – or an unexpected rise in their living standards;
Installing a security system;
Not allowing one person to handle and control the finances;
Taking time to review accounts;
Carrying out surprise audits;
Not allowing employees’ handbags near cash registers;
Paying above minimum wages;
Requiring all cheques to have two signatures; and
Setting up a system allowing anonymous reporting of co-workers.
Employee Fraud Facts
The Australian Federal Police say 70% of all business fraud losses are from staff or former staff, amounting to at least $1.5 billion a year.
A 2006 KPMG Fraud Survey showed that 14% of employees taking part in fraudulent conduct had a history of dishonesty with previous employers.
False invoicing and theft of cash or inventory were the most common frauds according to the 2006 KPMG Fraud Survey.
Experts believe the true level of employee theft is higher than statistics indicate. A 2005 Australian Institute of Criminology report found only one in 17 incidents of employee theft was reported to police.
Please Contact Us for any further discussion on Fidelity or Employee Fraud Insurance – we would be happy to talk through your options and arrange cover.