Profits for financial institutions (FI) insurers’ accounts are marginal, and claims behaviour and innovation are suffering from the knock-on effects.
Buyers are enjoying significant cost reductions in the competitive FI market, but the lack of rate has seen some insurers play hard ball. Rather than look for ways to pay claims, some insurers are aggressively using legal advisers to find reasons to avoid claims.
However, opting for an insurer with the expertise and financial clout to settle claims willingly and efficiently should be easier in the current climate: the pricing gap between market leaders and the rest of the pack is narrowing.
The lack of rate is also hampering innovation and product development. This comes at a time when financial institutions are calling for innovative products to help them in a changing risk landscape.
There is an exception to this though , the need for innovation around cyber and financial crime is clear. There has been a significant increase in financial crime and fraud within the financial institutions sector with some high profile losses being reported in the media Elements of cyber cover are already embedded in financial institutions coverages – including professional liability and crime policies – but the standard policies for example do not cover first party data breach exposures, or fraudulently induced payments .
We are pushing Insurers to agree various changes to broaden the scope of the policies but they still fall short of the cover that is available under a separate cyber policy. However, we are pushing Insurers to provide fully integrated cyber insurance cover within FI policies and anticipate that will be available over the next 12-18 months.
Topical tip for buyer
Cyber is a big topic for financial institutions, and clients need to ensure they have the right cover. It is important that clients work with their brokers to understand what cover is already embedded in their existing insurances, conduct a gap analysis and then make informed decisions.
For further information, please contact Paul Towler, Senior Partner on +44 20 7558 3327 or email firstname.lastname@example.org