Which entity usually issues fidelity bonds?

Fidelity bonds are a type of insurance designed to protect employers from losses caused by dishonest employees, such as theft or fraud. Insurance companies typically issue these bonds as they are specialized entities equipped to assess risk, underwrite policies, and provide the necessary financial backing that guarantees compensation in the event of loss.

The role of insurance companies involves evaluating the level of risk associated with insuring an individual or organization against potential employee dishonesty. They provide the expertise needed to set appropriate premiums based on the bonding amount and the perceived risk of the insured entity. Furthermore, when a loss occurs, it is the insurance company that manages the claims process and provides compensation to the insured party, thereby fulfilling the purpose of the fidelity bond.

Other entities listed, such as government agencies, trade associations, and financial institutions, do not typically issue fidelity bonds. While they may play various roles in related financial procedures or regulations, they lack the specific capabilities and functions of insurance companies that are essential for underwriting and managing fidelity bonds.