A Transaction Cost Approach to the Analysis of Employee Fidelity Bond Market

• Main Authors: CHENG-LUNG PENG, 彭程隆
• Other Authors: "none"
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/99244886038141407353

碩士 === 逢甲大學 === 風險管理與保險研究所 === 99 === Employee fidelity bonding is a form of insurance that covers losses caused by employees’ dishonest or fraudulent behaviors. Different from the general insurance, employee fidelity bond is special in that some immoral acts (e.g., fraud, theft, or forgery) are not excluded from its coverage. Although employee fidelity bond could provide a risk management service to against losses through the dishonesty of an employee, the problems of adverse selection and moral hazard may occur within the transaction. It is possible for an employee to buy a fidelity bond deliberately just for obtaining unfair benefits from an insurer. Previous analysis of insurance often focuses on planned frauds and opportunistic frauds, but very little of them address the two issues in the employee fidelity bond selling. This paper provides a transaction cost analysis of employee fidelity bond transaction. We examine how planned frauds and opportunistic frauds may affect an insurer’s willingness to provide employee fidelity bonds and further investigate what insurers may do to alleviate the transactions costs during the whole transaction process. This paper highlights various theoretical and practical issues that can potentially thwart the employee fidelity bond selling, and we believe the results are useful to insurance researchers and practitioners.