The most important fidelity bond underwriting consideration is the presence and strength of “internal controls”. A sound system of internal controls is an essential element of enterprise risk management. Every company with any significant employee dishonesty exposures should have formal internal control policies or a financial and accounting procedures manual. Applications and questionnaires for fidelity bonds most often group questions about internal controls under the heading of “separation of duties”, because essentially that is exactly what they are. The underwriter will want to satisfy him or herself that duties such as check writing, deposit functions, withdrawal/funds transfer functions and inventory management are absolutely separated from account reconciliations. Failure to institute this clear separation will disqualify an applicant from fidelity bond coverage. Additionally, there are physical safeguards that should be instituted to lessen the chance of a dishonesty loss such as limiting access to check books, petty cash drawers and valuable inventory. Lastly, requiring employees to adhere to ethical standards in general and appropriately sanctioning those who refuse to do so, will lessen the likelihood that your enterprise will employ potential offenders for extended periods of time.
The basic commercial crime coverage forms can be further broadened by negotiated endorsement. Do you have an “outside of the box” or “non-standard” fidelity risk? No problem. Do you need a special fidelity bond manuscripted for your particular need? No problem. We have an appetite!
National surety bond leader, Surety One, Inc. specializes in underwriting fidelity risks for ALL business classes. Fidelity bonds for TPAs, MGAs, title agencies, labor unions and other hazardous classes are part of Surety One’s offer as a bonding company that NEVER turns away an insured. For more information visit us at SuretyOne.com, call (800) 373-2804, or email us at Underwriting@SuretyOne.com for a fidelity bond application or further information about our commercial crime policy program.