During our audit of controls over automatic indemnity claim payments, we found significant internal control weaknesses in the Postal Service’s claims system.
The Postal Service offers up to $5,000 of insurance coverage as protection against the loss or damage of customers’ packages. Some domestic premium products (for example, Priority Mail and Priority Mail Express) offer free insurance, generally at $100 or less. When an insured item is lost or damaged, the customer may request compensation by filing a claim. When the Postal Service approves a claim, it pays the lesser of the maximum insurance coverage amount or the value of the lost or damaged item.
From fiscal year (FY) 2014 to FY 2019, the Postal Service paid a total of about $194 million in connection to about 2.3 million domestic indemnity claims. During that period, the number and dollar value of domestic indemnity claim payments per year more than doubled.