The Answer in 60 Seconds: Fidelity Guarantee (FG) cover is voluntary, not statutory. It indemnifies a business against direct financial loss from employee fraud or dishonesty. Insurers' claim documents can ask for a police report (Great American's and China Taiping's fidelity claim documents list one), notice periods can be short (MSIG's SUMO wording requires written notice within 7 days), and loss discovered after the policy or the employment ends is covered only within a fixed window (Tokio Marine's Fidelity Guarantee page gives three months after the termination of the policy or of the employment). The insurer may appoint a loss adjuster to assess the loss.

What FG covers and what it doesn't

Covers: theft, embezzlement, forgery, misappropriation by an employee acting alone or in collusion. Per Lonpac's published policy summary: "This insurance policy protects the employer against loss sustained as a result of acts of fraud or dishonesty committed by their employees." Whether it covers your liability when your employee defrauds a third party depends on the wording: a broker's published example says it would (Provide, providecover.com: "Liability to defrauded business partner"), but Tokio Marine's Fidelity Guarantee page lists "Third party losses" among its exclusions.

Does not cover: losses caused by owners or anyone else who is not an employee (the wordings cover acts of employees); losses by employees not on the declared list (some policies); losses discovered after the run-off window post-termination; trading losses or bad commercial decisions; consequential losses (sometimes).

The Step-by-Step

Step 1 - Confirm dishonesty before acting. Internal audit trail: bank statements vs ledger, customer payments vs deposits, expense claims vs receipts, system logs. Many false alarms turn out to be process failures rather than dishonesty. Most FG wordings require "discovery" of an act of fraud - speculation isn't enough.

Step 2 - Preserve evidence. Lock the employee's email, retain server logs and access records, secure physical evidence. Do not edit or "tidy" the audit trail - chain of custody matters in both insurance and police investigation.

Step 3 - File a police report. Per Great American's FG claim form: "Has a police report been filed? If yes, please provide copy of the police report to our office." FG wordings can make it a condition precedent: MSIG's SUMO wording requires immediate notice to the police and makes compliance with its conditions a condition precedent to any payment. File at any Neighbourhood Police Centre or via the SPF e-Services portal. The Singapore Police Force's Commercial Affairs Department is its white-collar crime investigation agency.

Step 4 - Notify the insurer within the policy window. Notification windows are short and policy-specific (commonly within days to a few weeks of discovery). Notification to the broker or insurer in writing. Include: nature of the dishonesty, estimated quantum, employee name, period, police report reference. Read your specific wording for the precise window.

Step 5 - Do NOT confront the employee without legal advice. Under Singapore employment law, summary dismissal for misconduct must follow proper inquiry under the Employment Act. Botched dismissal can result in wrongful dismissal claims that complicate the FG claim and may breach defence-cooperation conditions in the policy.

Step 6 - Forensic accountant. Depending on the situation, the insurer may appoint a loss adjuster to assess the loss, and a forensic accountant may be engaged. Major firms with established forensic accounting practices in Singapore include KPMG, Deloitte, EY, PwC, RSM and BDO Singapore. Expect:

  • Reconstruction of transactions
  • Identification of the dishonesty scheme
  • Quantification of net loss (gross loss minus any recoveries)
  • Period of dishonesty (some policies have an initial "non-cumulative" limit per period)

Step 7 - Submit the claim file:

  • Completed claim form
  • Police report
  • Statement of account showing the amount of loss (and any forensic accountant's report)
  • Employment records (offer letter, role, access privileges, termination letter)
  • Audit findings
  • Bank statements, ledgers, supporting documents
  • List of recoveries (cash, sale of property, undelivered wages owed to employee, etc.)
  • Statutory declaration where required

Step 8 - Recovery offset. Per China Taiping's published claims procedure: "Any moneys of the Employee in the hands of the Employer and any moneys which but for act of fraud or dishonesty would have been due to the Employee from the Employer shall be deducted from the amount otherwise payable under this policy." Under such a clause, money still due to the employee, such as outstanding salary or bonus, is deducted from the claim; Great American's claim form asks the insured to retain it "to the extent allowed by law".

Step 9 - Settlement and subrogation. Once paid, the insurer is subrogated to the employer's right to recover from the employee. Recoveries are shared as the policy says: MSIG's SUMO wording, for example, shares any other recovery between insurer and insured in proportion to the part of the loss each bore.

Discovery period and post-termination claims

Per the published Tokio Marine wording: "in respect of loss arising from fraudulent embezzlement or misappropriation committed during the period of insurance and discovered after but within three months of the termination of this Policy or the termination of the employment of such Employee… the Employer shall be entitled to claim for any such loss which arose within the period of twelve months immediately prior to the date of termination." Translation: discovery must be within 3 months post-termination (of policy or of employment), and the loss-incurred period is capped at 12 months prior to termination. Read your specific wording - some are 6 months, some 12 months.

Common Mistakes

  1. Confronting the employee first. Tips them off, evidence destroyed, claim weakened.
  2. Skipping the police report. Notice to the police can be a condition precedent (MSIG's SUMO wording makes it one), and the claim then fails.
  3. Late notification. Discovery starts the clock; the policy window is firm.
  4. Employees not on the declared list. If the wording is named-position, undeclared employees aren't covered.
  5. Co-mingling with civil recovery. The insured cannot recover twice for the same loss; civil settlement reduces the FG claim.
  6. Treating "trading loss" as dishonesty. A trader who loses money on bad calls is not dishonest. FG is for intentional dishonest acts.

What This Means for Your Business

Per PwC's Global Economic Crime and Fraud Survey 2018, Singapore findings (PwC Singapore press release, 17 May 2018): "more than one in three organisations in Singapore (35%) reported suffering fraud in the last two years, up from 22% in 2016". The survey had 118 Singapore respondents, and the 35% figure covers fraud of all types, not only fraud by employees. Common patterns: accounts staff diverting payments, sales staff faking expense claims, warehouse staff stealing stock, IT staff misusing access.

The insurance is voluntary; the underlying control discipline is not. Wordings can tie the cover to the checks the business declared: MSIG's SUMO wording says the insurer is not liable if "the precautions and checks for securing accuracy of the accounts mentioned in the said proposal" are not duly observed.

For SMEs with under 20 staff, dual-signature controls can feel onerous, but a wording can make the checks declared in the proposal a condition of cover.

Questions to Ask Your Adviser

  1. What is the discovery period and the look-back period under my specific FG wording?
  2. Are all my employees covered, or is the policy schedule named-position or named-individual?
  3. What internal control warranties does my policy require, and am I compliant?
  4. Will the insurer pre-approve my forensic accountant of choice or appoint one?
  5. How does subrogation operate - can the insurer pursue the employee in my name?

Related Information

Published 4 May 2026. Source verified 4 May 2026.