Midlands Breweries Limited has sued Professional Insurance Corporation Zambia for failing to compensate the company for the loss of funds which were stolen by its employees who were covered under a fidelity guarantee policy.
The company is claiming the payment of monies insured with the insurance company amounting to K1.2 million as compensation arising from theft of funds by Midlands Breweries company’s servants, damages for breach of the insurance policy as a result of Professional Insurance’s refusal to compensate the company, interest on the amount owed, any other relief the court may deem fit and costs of the action.
Midlands Breweries insured its business funds with and by Professional Insurance under the Fidelity Guarantee Policy No. 208/20/2018/00013.
The company’s business money was allegedly stolen by the Breweries company’s then assistant accountant, the cashier and other staff in the accounts department through fraudulently false accounting and money laundering.
At the time the thefts occurred, Midlands Breweries was still covered by the Fidelity Guarantee Policy amounting to K500,000 per year of the cover.
Under defined events of the cover, the policy covered “loss of money and/or other property belonging to the insured or for which they are responsible stolen by an insured employee during the currency of this section. Direct financial loss sustained by the insured as a result of fraud or dishonest of an insured employee all of which occurs during the currency of this section which results in dishonest personal financial gain for the employee concerned”.
The company incurred losses amounting to about K222,677 in 2017,K1,822,217 in 2018 and K1, 497 in 2019 due to the theft of the company money by the said employees.
The funds stolen were insured for the years 2017, 2018 and 2019 and the maximum payable per year was K500,000 and from the audit findings, K222,677 is payable for 2017, K500,000 is payable for 2018 as well as another K500, 000 for 2019 therefore the total claim for the theft Midlands Breweries suffered from its employees is K1, 222, 677.
The loss arising from the theft was brought to the insurance company’s attention in line with the policy requirements but no payment has been made to date, Professional Insurance was served with documentation showing that the employees who stole the money were being prosecuted but justified the refusal to pay saying “the triggers of a fidelity guarantee policy are theft by an employee for personal financial gain. Therefore, theft has to be proved for the policy to respond”
According to a statement of claim seen by the Zambian Business Times – ZBT, Midlands Breweries claims there is no clause that states that the policy must be proved through court proceedings particularly a conviction in a criminal trail of the employees as suggested by the insurance company for the policy to respond or be paid.
Midlands Breweries has repeatedly challenged Professional Insurance to point to the clause in the fidelity guarantee policy document which suggests the requirement of proof of theft through conviction of the employee and the insurance company has failed/refused and neglected to do so.
Professional Insurance in its response has introduced new and unreasonable conditions to the policy which have no basis and changed the reason for the refusal to pay the entire amount on grounds that the losses incurred were discovered and reported beyond 90 days and hence 50% of the deducted when in-fact the said theft occurred at different times some of which occurred within 90 days.
The company has suffered loss, damage and inconvenience and continues to suffer loss, damage and inconvenience as a result of Professional Insurance’s refusal to compensate the company as per the policy.
