Independent insurance agencies and brokers need to guard against fraud in their own offices, but more importantly, they need to help their small and mid-size business clients do the same.

Here are some basic steps you can share with your clients that they can take to lessen their vulnerability to fraud:

• Be aggressive. Adopt a code of ethics for management and employees. Evaluate your internal controls for effectiveness and identify areas of the business that are vulnerable to fraud.
• Establish hiring procedures. When hiring staff, conduct thorough background investigations. Check educational, credit and employment history (as permitted by law), as well as references.
• Train employees in fraud prevention. Do workers know the warning signs of fraud? Ensure that staff members know basic fraud prevention techniques.
• Implement a fraud hotline. Fraud is still most likely to be detected by a tip. Providing an anonymous reporting system for your employees, contractors and clients will help uncover more fraud.
• Increase the perception of detection. Communicate regularly to staff about anti-fraud policies, ways to report suspicions of misconduct, and the potential consequences (including termination and prosecution) of fraudulent behavior.

Related: 5 steps to avoid internal fraud