Increase in Fidelity Guarantee Claims

Over the past year, insurers have observed a significant rise in Fidelity Guarantee claims, particularly within Body Corporates, Homeowners’ Associations, and Property Management environments.

While Fidelity Guarantee cover is intended to protect an insured entity against financial loss caused by fraud or dishonesty, the effectiveness of this protection depends on the strength of governance and internal controls in place.

Why Claims Are Being Declined

A large portion of claim rejections shares a common theme: weak or absent financial controls.

Typical issues include:

• Payments processed without dual authorisation.

• Lack of segregation of duties (for example, the same person collecting and disbursing funds).

• Bank reconciliations are not reviewed by an independent party.

• No formal policy outlining approval limits or expenditure procedures.

Without these foundational checks and balances, insurers may find valid grounds to repudiate claims under the Fidelity section.

Strengthen Your Fidelity Posture – The 5-Star Approach

To ensure that Fidelity cover responds when needed most, we recommend adopting the following five-point best-practice framework:

1. Dual Control: Ensure all payments are authorised by at least two signatories.

2. Segregation of Duties: Separate responsibility for receiving, recording, and paying funds.

3. Independent Oversight: Conduct regular reconciliations and have them reviewed externally.

4. Documented Policies: Implement clear written procedures for authorisations and expenditure.

5. Ongoing Training: Educate trustees, directors, and staff about financial control responsibilities.

Good Controls = Good Governance

Effective internal controls are not only a condition of Fidelity Guarantee policies, but also the cornerstone of sound and sustainable management practices.

Insurers emphasise that risk management begins long before a loss occurs. A strong Fidelity posture protects not only the insured funds but also the organisation’s reputation, governance integrity, and community trust.

A Shared Responsibility

Maintaining robust controls is the responsibility of every individual entrusted with financial oversight, including trustees, directors, managing agents, and employees. Each person plays a vital role in ensuring that Fidelity cover remains valid and responsive when it matters most.

Need Assistance?

If you would like to review your Fidelity posture or confirm that your cover aligns with your operational environment, please contact us for professional guidance and support.

Together, we can uphold the highest standards of governance, protection, and accountability across every scheme we insure.