1.Financial institutions are increasingly being scrutinized by regulators, both federal and state, about their safeguards to protect sensitive customer information. These regulatory inquiries are not only focused on the banks’ internal data protection protocols and procedures but also extend to questioning whether a financial institution purchases privacy/cyber liability insurance. – William Goett, managing principal, Integro USA Inc.
2.Financial institutions have a unique set of insurance coverages available to them to address the specialized aspects of their operations. These include coverages such as mortgage impairment (to protect a bank’s collateral interest in real property), all risk physical loss or damage to cash and securities (to protect against loss while these assets are in transit or at rest), safe deposit box liability (to protect against customer claims of negligence while their property is stored in a bank vault) and master trust (which is essentially a group homeowners policy to protect real property when the bank is serving in a fiduciary capacity as the trustee of that property). – William Goett, managing principal, Integro USA Inc.
3.In the post-financial crisis environment, financial institution directors and officers are under heightened scrutiny from regulators and shareholders, creating a need for broad D&O insurance coverage that provides regulatory investigations coverage and personal asset protection. – Robert Meyers, property/casualty leader, USI Insurance Services
4.Another significant challenge for financial institutions is reputational damage due to various incidents, including management practices and data security breaches. As such, insurance solutions that offer financial institutions and their leaders with reputational damage coverage are of critical importance. – Robert Meyers, property/casualty leader, USI Insurance Services
5.Insurance and risk management solutions for financial institutions have evolved significantly over the past two decades and more recently, the past few years, in line with new and emerging risks, changing market complexities and tightening regulation. Escalation in cybercrimes has led to the creation of a robust cyber insurance market in recent years. Cyber exposures are further exacerbated by the dramatic move from bricks and mortar banking to personal device and online banking. In addition, corporate network breaches, which were rare occurrences a decade ago, have become commonplace. – Robert Meyers, property/casualty leader, USI Insurance Services
6.There’s an interesting paradigm shift underway in the financial institutions space that’s really changing the risk landscape for banks, asset managers and financial technology companies. Institutions are focusing more on regulatory capital requirements, while technological advances challenge the way traditional players interact with customers. Meanwhile, demographic and behavior changes are creating a new generation of customers with different expectations of financial institutions. – Michael O’Connell, Financial Institutions Industry leader, Willis North America
7.In addition to financial risks such as those resulting from interest rate exposure, banks are worried about risk of losses from cyber intrusions. And beyond the institution, board members themselves face exposure should a customer sue because of ID theft or similar loss. This concern was demonstrated in the results of the second annual Travelers Business Risk Index released in May. Cyber risks ranked as the top concern for U.S. banks and financial institutions, followed by concerns including complying with law, legal liability and broad economic uncertainty – Ken Chapman, senior vice president, Financial Institutions, Travelers Bond & Specialty Insurance.
8.The best way for financial institutions to protect themselves against claims is to take a multi-pronged approach to compliance and risk management, stay abreast of the complex and changing issues and ensure that the organization has proper insurance in place to cover any missteps. Agents and brokers can serve as trusted advisors in an ever-evolving and risky sea of business. – Ken Chapman, senior vice president, Financial Institutions, Travelers Bond & Specialty Insurance
9.As financial institutions seek new sources of revenue to supplement their interest income, these new services may increase their E&O exposures. For example, adding insurance agency and stock brokerage services create potential new risks where insurance could offer some financial protection. – Steve Ventre, vice president, The Cincinnati Insurance Companies
10.In a landscape of heightened regulatory scrutiny, it is important that investment advisors and mutual fund managers are aware of their regulators’ examination priorities, such as protecting retail investors’ interests, assessing market-wide risk issues, and protecting valuable customer information from cyber-attacks. – Marc Berner, leader of The Hartford’s management and professional liability for financial institutions
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