Do you really know who you are employing?

Since the economic downturn of 2008, insurance brokers have seen a significant rise in the number of Fidelity Guarantee claims submitted due to a theft of money or goods by employees.  Fidelity Guarantee cover can provide an indemnity - subject to the terms and limits of your individual policy.

One of the main conditions of a Fidelity Guarantee policy is that you obtain references for all your employees. The following extract is a sample from a typical policy:


a) The insured shall obtain satisfactory references to confirm the honesty of each employee who will be responsible for money goods accounts computer operations or computer programming engaged after commencement of this policy.

b) Such references shall be obtained directly from former employers for the three (3) years immediately preceding engagement and before the employee is entrusted without supervision.

c) References need not be obtained in respect of employees who have satisfactorily and continuously served the insured for at least one (1) year in another capacity before being entrusted with the duties referred to above.

d) In respect of employees joining directly from school or government sponsored youth training schemes one (1) character reference shall be obtained.

e) A written record of any verbal reference shall be made at the time it is obtained.

f) The original copy of each written reference and the record of any verbal reference shall be retained by the insured and made available for inspection by the insurer on request.

If you have not fully complied with the reference condition then it is unlikely that your claim will be met.  

Many of the incidents reported have involved staff members who it later transpired had similar history with previous employers for this type of crime.  If operators had followed up the references when the employees were first taken on, then they could have avoided the distress that was subsequently caused.  Clubs across the country lost tens of thousands of pounds to avoidable claims - money which they could ill afford to lose but had no insurance cover without references.

Cheques, banking and statements

Insurers also insist that money is banked regularly, receipts are reconciled with bank statements and that cheques over a certain limit are signed by more than one person. An independent stock take should take place regularly and some policies even insist that all employees who have any responsibility for money or stock, take two weeks uninterrupted holiday each year.

All these measures are designed to prevent theft but also identify if a crime has been committed more urgently.


For further information contact BHA Business Partner NDML

Visit NDML website or call 0844 488 9205. 


NDML, specialist insurance brokers to the leisure and hospitality industry work in partnership with experts from all fields and can advise on the above.  Be sure to read your policy wording and if you have any concerns that you cannot comply with the conditions then take the necessary action now - it might save you a lot of heartache further down the line. 

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