Infidelity: dishonest fraudulent acts of employee.

 

Infidelity - coverage in respect of the losses sustained due to the dishonest or fraudulent acts of the Insured’s employees.

Losses sustained under this category of coverage do not distinguish between any particular position, level, or territory, and for many years have accounted for a large proportion of any institution's losses. In some extreme cases, substantial losses emanating from the dishonesty of employees has resulted in the institution’s liquidation.

However, it should be noted that there are many definitions of "employee" and in accordance with their requirements, each financial institution should seek to obtain the widest available definition to suit their individual needs.

It should also be noted that whilst the standard Bankers' Blanket Bond policy has provision for the dishonest and/or fraudulent act of employees involved in trading, coverage usually excludes "trading losses" which arise through the negligent act of employees (i.e. breaching trading guidelines on foreign exchange transactions). Actions involving the infidelity of employees shall be covered only when they involve "improper personal financial gain".

In view of the foregoing the careful wording of this clause is imperative, to ensure adequate protection of the institution’s interests