Facts prove that 80% of business embezzlement, fraud and abuse happens internally by team members!
The Association of Certified Fraud Examiners states that team member dishonesty can range from tens of thousands to millions of dollars. Our 20 years of investigating dental and medical practices and nonprofits across Canada and the United States have proven losses ranging from $3,000 to $2.1 million! In 2016, losses of over $1 million was proven by Brytan & Associates professionals.
Is there protection against such losses – YES! Fidelity Bonds, also called team member dishonesty coverage or crime coverage, are very available to dental and medical entities. It is customizable, inexpensive, and provides protection from $10,000 to $100,000.
Fidelity Bond Defined –
- Great for dental and medical practices and nonprofits.
- Fidelity bond is a straight forward insurance policy and does not accrue interest.
- Can be a part of the practice property or malpractice insurance.
- Can be purchased as a stand-alone policy or as an add-on or endorsement to another business policy. Ask your agent.
- Can be issued for specific position(s) or individual(s). Where available, obtain coverage for the entire team as a group.
- The coverage is for direct physical loss to practice personal property, including money and securities, which results from the dishonest acts committed by the team member(s).
- Can cover fraud, theft, forgery, disappearance, destruction, alteration of practice documents, unauthorized electronic funds transfers, credit card fraud, computer fraud, money order fraud, counterfeit fraud, etc. It’s critical that you have a clear understanding of what is and is not covered. Do not be shy about requesting a clear listing before signing on the dotted line!
- Identity Theft and HIPAA breach coverage is now available from some carriers. Ask about them!
- Typically, fidelity bonds do not cover accounting or math errors or omissions, government seizure (IRS taxes), vandalism, loss of income as a result of team member crime, fraud involving restatement of any type of profit and loss documents, or policyholder theft.
- A fidelity bond can be purchased as additional coverage on most business policies. Amounts will vary, some policies include $10,000 of coverage automatically with the option to increase to $25,000 and provide increases up to $100,000.
- If unable to add this coverage to an existing business policy, it is possible to purchase a stand-alone fidelity bond. Prices for this type of coverage vary by number of team members, amount of coverage, and type of dental/medical practice. An application is usually needed to obtain a premium quote.
- The cost for the coverage is minimal, usually less than $100/year depending on your business (dental/medical) location. Recently, a client obtained coverage of $25,000 for $92.00 yearly.
Notes on Filing a Claim –
- If a claim is required, contact the issuing agent and request a claim form. The length is generally two pages and every carrier is different as to the amount of detail.
- When asked by your agent and carrier as to the amount of loss, it is suggested a general answer be provided such as “the investigation is ongoing and I do not know the amount at this time.”
- Filing of an initial law enforcement report is required to obtain a case number. This is needed in most jurisdictions but the execution and handling can vary widely. Another good reason to consider legal counsel guidance. The case number establishes that the matter is “real and serious” with the insurance carrier and others.
- A copy of the law enforcement report must be attached to the claim form.
- The policyholder will be asked to provide documentation supporting the details of the loss and amount. It is suggested that the details and amount of loss are provided at the end of the investigation and carefully worded. Clients have found it best to seek legal representative guidance. Insurance carries do not make any money paying claims. A copy of the investigation report should accompany the claim form along with the law enforcement report.
- Make sure to copy everything submitted to the carrier for your records! Send only by “return receipt requested” and track delivery. Ask your agent the very best way to handle submission to insure proper and timely processing. Remember, it’s to your total benefit not theirs.
Next Steps – No Debate:
- Schedule a required team meeting when you receive the policy!
- Objective is for every team member to know that a fidelity bond is in place.
- Ask your agent to come and explain to the team what a fidelity bond is, coverage, etc.
- Do not tell the coverage amount – very important and there is no need to know.
- Do not go into a detailed explanation about coverage types, e.g., fraud, embezzlement, abuse, etc.
- Stress positives like document protection, ID theft, HIPAA breach, and others your agent should be able to provide.
- Mention that law enforcement and the insurance carrier will investigate and determine claim handling. The stated objective: you, as the policyholder, are really looking out for the team, patients, etc.
- The principle that should be clearly stated is that others are now part of our team to help protect the practice, patients, team members and our future.
- Anyone wishing to do the practice harm will very likely already know about fidelity bonds and guided accordingly.
Congratulations, you are the proud owner of great benefits and the lowest cost insurance per thousand you can purchase that I know of. Just think, it provides the very best for everyone: reduces stress, provides greater peace of mind, and quietly helps you retire in the manner earned.