Protecting your business from employees

In a previous blog discussed 10 types of insurance you need to insure your business against. One of the key business insurance options we listed in that blog was Fidelity Guarantee Insurance. Fidelity Guarantee Insurance protects your business from theft or any financial loss incurred from fraudulent activities or theft by your employees while they are employed by you.

Employee fraud in South Africa
Employee fraud costs South African businesses millions every year. Statistics show that during an economic downturn the probability of employees committing fraud increases as companies are more likely to reduce, or even stop, pay increases during difficult times. The temptation of dishonest financial gain can motivate an employee under financial pressure, causing crippling financial losses to a business or even forcing the business to shut down.

Fidelity Guarantee insurance
Fidelity insurance is one of the most important - yet most overlooked - insurance options for businesses. Any business is exposed to risk associated with employee theft or fraud.

Fidelity insurance indemnifies the business owner for loss of property or money as a result of dishonesty, fraud or theft by an employee in the duty of their employment.

Some business owners may not want to admit their need for such cover or do not want their clients to know they have it, fearing it may reflect badly on their business. However, the benefit of fidelity cover far outweighs the possible losses business owners could experience should an employee commit fraud.

If your business handles cash or stock or has access to bank accounts where employees manage large amounts of money, Fidelity Guarantee insurance will provide the peace of mind you and your clients need.

This type of insurance only covers employees, not directors. It excludes financial losses resulting from negligent employees for mistakes like accounting errors. Talk to your Garrun broker for a full list of exclusions.

What can you do to discourage employees being dishonest?
Rotating employees who work with money, stock or bank accounts will limit the chances of fraudulent activities since any irregularity is likely to be spotted by another employee. Putting efficient checks and controls in place, such as requiring multiple signatories for transferring money from any company bank account and rigorous auditing procedures, should further diminish the chances of ongoing fraud by employees.

Always screen potential employees carefully by checking their credit record and conducting a thorough background check. Performing comprehensive assessments on each job applicant before appointing them will eliminate employing a serial fraudster or someone with serious financial problems.

Talk to your local Garrun broker about Fidelity Guarantee insurance for your business.