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
institutions 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.