In a recent financial lines seminar sponsored by Willis Group Holdings, nearly 90 percent of those attending indicated they believe the current economic climate has increased the risk of litigation against financial institutions.
The seminar, titled “Credit Crunch Fallout: The Effect on Insurance Risks for Financial Institutions,” was a joint presentation by Willis and the law firm K&L Gates to their financial institutions’ clients. The event was held at Willis London headquarters building on Lime Street. Company secretaries, finance directors, risk managers and insurance buyers from 40 financial institutions attended.
Commenting on the survey’s findings, Duncan Holmes, Executive Director of FINEX and co-head of the Willis’ Financial Institutions team, stated: “This survey clearly shows that senior officials of financial institutions are concerned about growing exposure to lawsuits, and the significant trend of increasing claims frequency and severity. The findings also highlight the fact that policy wordings will need to be reviewed and limits of indemnity checked for adequacy.”
Of the 108 participants who took part in the survey, 87 percent said they felt more vulnerable to litigation in the current economic climate. Other findings in the survey included:
— 35 percent of participants believe that their companies have an exposure to claims and investigations in the US.
— 52 percent have accepted that Financial Lines insurance premiums will increase at their next renewal, and 13 percent said they would be very concerned about such increases.
— 64 percent had recently completed a review of their chains of communication in order to avoid delays in notifying claims.
–68 percent of delegates claimed that a review of insurers or broker relationships in the coming year is likely to occur.
Speaking for K&L Gates were Alan Berkeley, Jane Harte-Lovelace and Sarah Turpin, who presented an overview of current claims, litigation trends and regulatory risks faced by financial institutions in North America and the UK, and gave tips for maximizing insurance cover.
Holmes shared experiences from the financial lines insurance market with lessons learnt from fourth quarter renewals, the reinsurance renewal season and insurers’ financial results, and discussed the ramifications for the market in 2009.
Source: Willis Group Holdings – www.willis.com