Understanding Fidelity Insurance for Golf Clubs, Sports Clubs and Social Clubs
Fidelity insurance under Management Liability Policy protects a business when an employee intentionally steals or embezzles money. Also known as MLP insurance, Management Liability policies safeguards businesses against negligence, discrimination and fraud. The legal cost and compensation consequential of MLP claims are expensive and can be financially devastating for a golf club or social club.
At Club Insure, we have had an inhouse claims teams for over 20 years; their experience and knowledge of the sector allows them to capably handle MLP claims. Their specialisms include fidelity, theft and fraud – in our time leading the sector, Club Insure have seen all forms of negligence and employee dishonesty. We are your safety net, and when an intentional act of fraud occurs, our Management Liability Policy is in place to financially reimburse your losses.
It’s important club managers understand how they are covered by MLP, the extent of the cover and what exclusions apply. Clubs need to be aware that their staff pose a risk, and it’s always beneficial to regularly review your club’s finances safeguarding against skimming or negligence. When trust breaks down, fidelity insurance might be your only defence from embezzlement and irrecoverable funds.
What is Fidelity Insurance?
Fidelity insurance is specifically designed to protect against risks posed by employees. It covers acts that are deliberate and dishonest, where the employee causes a direct financial impact. Acts which are covered must be intentional; they include skimming cash, diverting payments, manipulating spending, forging cheques, or abusing business accounts.
To successfully claim for fraud under MLP cover, losses must be measurable, including a clear definable figure. Insurers will require the police to be involved, therefore claims of fraud are subject to the results of police investigation and take direction from their findings. These cases are highly sensitive and pose severe consequences for offending individuals. Yet subsequent indirect losses, such as losses pertaining to reputational damage or business interruption, are not included within the MLP policy.
What to do if you inspect an employee of theft or fraud?
Theft or fraud are very serious allegations. It’s important to keep the matter confidential as to reduce the likelihood of misinformation or reputational damages.
Step 1: Contact the police, this ensures a full and proper investigation.
Step 2: Contact your insurance broker, report you suspect a theft or fraud and ask the insurance broker for guidance on how to proceed and perform due diligence.
Step 3: Carry out disciplinary action against the employee or volunteer, suspend the employee to ensure they cannot commit further fraud or theft.
Step 4: Collate evidence of fraud or theft, review your insurance for special circumstances or conditions that must be followed.
Step 5: Follow the guidance provided by both the police and your insurance broker.
Guidance is typically subjective to each circumstance or claim. At Club Insure, we have 20 years experience handling claims of this nature. Our in house claims team will be on hand to provide immediate guidance. Furthermore, through our partners at Sentient HR, we have the appropriate email templates ready for such correspondence as suspensions and dismissals where necessary.
What are the conditions of a Fidelity Insurance policy?
When you discover any act which may give rise to a claim you should immediately take steps to prevent further loss. Conditions of a policy are predicated on the correct and accurate actions take by an organisation. These actions may differentiate between insurers, however below are a few likely conditions regularly seen within an MLP policy concerning fidelity insurance.
- References – A satisfactory written reference should be obtained from any employee or club officer, covering their previous employment. These documents are likely to be required in the event of a claim. Furthermore, you should retain references for volunteers and employees as you will need to produce them for each person implicated in a claim who was engaged on or after the start date.
- Cheques – All cheques you issue with a value exceeding £5,000 will either be signed by two authorised signatories or by one authorised signatory who has more than a 5% share in the company. All cheque signatories will verify the invoices and any other vouchers against the cheque.
- Balances and Cash – Cash book entries and other records of money received should be fully checked on a regular basis. Ensure money is handed to an authorised employee, and banked within a specified time frame; no longer than three days upon receipt. At least monthly, a club’s records of money received and expended will be reconciled with bank statements, stamped paying in slips, receipt counterfoils, vouchers, cash in hand and unpresented cheques to produce an accurate balance. Petty cash must separately have a full reconciliation and resulting accurate balance at least monthly.
- Stock – Any and all stock should be independently and physically checked at least annually. The maximum period between any two checks will be 3 months for specified goods
What are the consequences of a Fidelity Insurance claim?
Without sufficient cover, clubs are at risk of amassing financial losses as well as significant reputational damages. Clubs should always be managing the risk of fraud, checking and double checking their income and balance sheets. However employee negligence and dishonesty is always a possible risk, therefore comprehensive fidelity insurance is an ever-present necessity.
Fidelity insurance with Club Insure will provide comprehensive protection, including cover against loss of money and stock as a result of fraudulent acts from your employees. Protection will be provided against petty cash thefts, forgeries, fraudulent transfers, siphoning funds and false expense claims – covering thousands of pounds worth of lost funds.
To learn more about management liability policy, or for a confidential review of your current insurance portfolio, or if you suspect an employee or volunteer of fraud, then contact the experts at Club Insure.