Archive for Financial Services
This coverage insures the legal liability of an accountant or accounting firm for injury or damage that results from professional services it rendered or did not render, caused or allegedly caused by neglect, error, omission, dishonesty, misrepresentation, fraud, libel, slander, or defamation of character. Certified public accountants and accounting and bookkeeping firms that employ accountants are eligible.
Actuaries were once associated with only insurance companies. They are now recognized as independent advisors whose expertise is used by many different businesses. Independent actuarial firms provide services such as outsourcing for insurance carriers that need temporary assistance on certain projects. They also offer advice to financial entities that attempt to determine the future value of potential takeover targets. Some perform analyses for insurance departments. The type(s) of actuarial service(s) the risk provides determines its underwriting acceptability and the premium to charge.
This insurance protects individual claims adjusters or adjusting companies against allegations of breach of duty due to actions of the named insured or its employees while acting as an insurance adjuster. Public adjusters usually work for individuals while private adjusters work with insurance carriers.
Automobile Repossessors Liability
Businesses that repossess automobiles have difficult liability exposures and require expert handling. General liability, especially personal and advertising injury liability, is required to cover the operations exposure. In addition, auto liability for tow truck operations is required. Drive-away coverage is needed to cover the liability exposure on the vehicle being repossessed and garagekeepers legal liability is needed to cover vehicles while in the insured’s care, custody, and control.
Bankers Blanket Bond : High Limits
The Excess Bank Employee Dishonesty Bond provides high limits bankers blanket bond coverage. This bond is written over Financial Institution Bond-Standard Form No. 24’s underlying limits. The excess bond protects banks against catastrophic employee dishonesty losses. The standardized excess blanket bond is Excess Bank Employee Dishonesty Bond-Standard Form No. 28. There is no specific formula to determine adequate limits for a given financial institution, but one guideline used is average deposits value
Business Legal Expense Insurance
This coverage protects usiness owners against certain types of unforeseen legal expenses. An important limitation is that it covers only legal expenses that qualify as a deductible expense on the insured’s tax form. It is not intended to pick up legal expenses that the insured’s general liability insurance covers. Examples include preparing and reviewing contracts, forms, and documents; litigating contract claims; responding to consumer legal actions; advising on labor problems; and even certain””white collar”” criminal charges. It reimburses legal expenses for defense costs, legal consultation, and plaintiff actions. Pricing is based on the types of expenses covered and the limits purchased.
Check Cashing Services
This coverage is designed for individual check cashing service businesses or those services that are part of another business. It covers losses due to employee dishonesty; loss inside or outside the premises; and forgery. When the check cashing service is part of another business, coverage applies to only the check cashing exposure.
Collateral Protection Insurance
Financial institutions involved in credit transactions may be exposed to heavy losses due to uninsured collateral. The cost to enforce insurance provisions and the number of repossessions caused by uninsured collateral has created the need for this coverage. Collateral protection insurance covers physical damage to collateral held by the lender. When the borrower breaches its contract and does not insure the collateral as it agreed to in the contract, this coverage is activated and the price of the insurance is added to the borrower’s monthly payment. This coverage protects only the lender’s interest. Autos, pickup trucks, vans, motorcycles, campers, motor homes, travel trailers, and boats are examples of property that this insurance covers.
Commercial Credit Insurance
Commercial credit insurance covers the insured’s loss when a credit customer becomes insolvent or refuses to pay its account. This coverage is rated on an individual basis. Manufacturers, wholesalers, distributors, and certain service businesses are eligible. Retail operations are not eligible.
Courier and Messenger Services
Courier and messenger services present significant insurance exposures because their vehicles operate almost nonstop in urban areas during normal working hours. In addition to auto exposures, couriers and messengers may also use bicycles, skates, or other means on sidewalks that create general liability exposures. Each risk must be considered carefully and cautiously. Premiums and deductibles depend on the operation’s size, the area served, and the type of vehicles used. Older vehicles are usually subject to mandatory inspections.
Crime/Fidelity Insurance protects businesses and Nonprofit Organizations from the financial consequences of Employee Dishonesty, Embezzlement, Theft of Property, Computer Fraud and Social Engineering.
Directors and Officers Liability: Financial Institutions
Financial institutions are one of the most difficult classes of directors and officers liability to insure because they are subject to significant regulatory and civil actions against their directors and officers.
Electronic Data Processing Equipment
This coverage insures direct physical loss or damage to electronic data processing system equipment and media including the introduction of viruses and damage by hackers. It also covers the extra expenses incurred to continue operations after the equipment or media is damaged. Business income coverage if the insured’s operations are partially or completely suspended due to damage to data processing equipment or media may also be provided. These coverages are usually written on an all risks type or special causes of loss basis. Most companies offer limited breakdown coverage.
Environmental Consultants E&O
Environmental consultants’ professional liability coverage insures against errors and omissions claims that allege that the consultant’s advice, assessment, or recommendations resulted in economic damages. It also provides defense coverage. It is written on a claims-made basis and is subject to a retroactive date.
Equity Protection Plan
This product is not insurance. It is a contract against the loss of home equity based on measurements of general declines in home values in designated areas. Home sellers can purchase equity protection for the home buyer’s benefit as an additional buyer incentive. Current homeowners can purchase it as a protection against possible declines. These plans are usually subject to a set number of months of ownership (waiting period) that must pass following purchase of the plan before a claim can be made. The value of the individual home is not considered in determining if a loss has occurred. Instead, any equity protection payout is based on the general market decline in the area where the home is located. The equity protection payout is made only when the home is sold.
Excess FDIC Insurance
The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to certain maximum limits per account. A limited number of carriers insure for amounts that exceed this maximum if the financial institution’s bankruptcy causes the depositor financial loss that exceeds the FDIC guarantee.
Excess Fidelity Bonds
Excess fidelity bonds may be written for financial institutions or other commercial entities as excess over a deductible amount or as specific excess. Many large banks or commercial entities regularly require large fidelity coverage limits, especially in cases that have a significant exposure to money or other negotiable instruments.:
Financial institutions’ theft and trust exposures are significant and require underwriting specialists to analyze and insure them. Banks, savings and loan associations, mortgage bankers, and other financial institutions’ exposures are based on their balance sheets, services offered, contractual obligations, and regulatory requirements. The exposures must be analyzed thoroughly to determine the exposures that must be insured and the ones that can be minimized or self-insured. By using deductibles, large cash and securities exposures can be covered more efficiently and proper attention paid to the truly catastrophe exposures. Some of the more important specialized coverages include financial institution bonds, errors and omissions coverage for trust department operations, lenders’ single interest coverage on auto and vehicle loans, mortgage errors and omissions, and financial consultants’ errors and omissions coverages. Directors and officers’ liability coverage must also be considered.
Force Majeure Insurance
Force majeure literally means ‘greater force.’ These clauses excuse a party from liability if an unforeseen event beyond the party’s control prevents it from performing its obligations under the contract. Force majeure insurance is a very broad form financial consequence policy that protects insureds that suffer financial loss because unavoidable circumstances lead to the loss of a contract through the force majeure section of that contract. This coverage is usually used with large contracts but not exclusively.
Forced-placed Foreclosure Property Insurance
This service is available to financial institutions to automatically provide coverage for mortgaged properties on which the borrowers are required to carry property insurance but have failed to meet the obligation. The cost of the insurance is added to the monthly obligations that borrower has to the financial institution. The financial institution has automatic binding authority.
Installment Sales Floater
Almost any business that takes in property of others for cleaning, repair, or processing can insure that property under a bailees customers coverage form. The most common example is laundry/dry cleaners, but furriers, jewelers, radio and television repair businesses, and metal and fabric processing risks can also purchase this insurance. This coverage is written on inland marine coverage forms that protect both the customer’s interest and the bailee’s interest in the property. Coverage is usually on an all risk-type basis subject to exclusions.
Insurance Company Financial Reporting
Independent agents must diligently research the insurance carriers that insure their clients. Vendors can supply many different types of information needed. Key financial information on companies is available. Reports that compare insurance carriers can be designed to include their top lines, rating, and other financial information for selected carriers.
IRA or Keogh Plan E&O
This coverage is written on a claims-made basis. It protects an IRA or Keogh plan administrator, often a bank or association, against claims that arise from alleged mishandling of the plan’s accounts. It covers defense costs and reimburses reasonable expenses and attorney’s fees incurred by officers or directors.
Lenders Environmental Liability Insurance
Financial institutions are increasingly concerned about their potential liability for cleaning up property if it is determined that the property on which they have made loans is contaminated by hazardous waste. Insurance coverage is available to protect real estate owners and lenders from government, state, and court mandated cleanup of contamination that is present but that was not detected when the property was purchased. Coverage also applies to costs associated with remedial investigation and feasibility studies, as well as defense costs that result from liability. It is sometimes known as secured creditor environmental exposure coverage.
Mortgage Bankers & Brokers
Mortgage Bankers and Servicing Agents E&O
This coverage protects against losses from any claim against the insured for alleged negligent acts, errors, or omissions committed in originating, financing, closing, selling, or servicing mortgage loans on real estate or providing advice for any of these.
Mortgage Brokers E&O
Mortgage brokers place mortgages for realtors who sell homes and commercial risks. The brokers arrange the financial papers and place the loan with secondary money markets or financial institutions. Unlike mortgage bankers, they do not handle the loan once it is placed. Mortgage brokers are the intermediaries between purchasers of the property and the lenders. Errors and omissions coverage protects the broker against loss from any claim for any alleged negligent act, error or omission in placing a mortgage.
Mutual Fund Managers E&O
Mutual funds permit smaller shareholders to invest in a number of stock portfolios instead of investing in individual firms. Fund managers have an important fiduciary responsibility to fund shareholders. Coverage for errors and omissions in administering the fund insures the fund itself, as well as individual managers, officers, and directors.
Mutual Funds Directors and Officers Coverage
Coverage is available for these exposures of mutual fund managers and investment advisers, mutual funds only, mutual funds and investment advisors, or investment advisors only. A combined package of coverages provides full directors and officers and full errors and omissions coverages on a claims-made basis. An optional extension period may be purchased if the insurer cancels or nonrenews.
Pension Consultants’ Professionals
Pension consultants are professionals who work with employers to formulate, implement, administer, and maintain qualified retirement plans and other employee benefits programs. They often work with actuaries to provide complete services to both employers and employees. The type of services provided determines the risk’s acceptability and the premium to charge.
Political Risk Insurance
Political turmoil throughout the world results in United States investors and business firms subject to the exposure of their assets in foreign nations being expropriated. A firm may be exposed to loss from any of three broad categories of political risk: seizure of assets, currency inconvertibility, and interference with contractual performance. Confiscation, expropriation, nationalization, deprivation and, in some cases, terrorist and war risk coverages may be written under political risk insurance programs.
Premium Finance Companies E&O
Premium finance companies provide flexibility for insurance agents and their clients. However, a premium finance companyâ€™s negligence can result in a substantial loss, especially if the insurance company cancels a policy for nonpayment of premium and a loss occurs during the lapsed time. Errors and omissions coverage pays defense costs and damages when allegations of errors or omissions are made against the premium finance company. The premium charged is based on the number of policies financed. Deductibles may be used in some cases.
This coverage protects the insured when confidential information belonging to clients, employees or vendors is breached because of an alleged error on the insured’s part. Coverage is provided for both defense and indemnification. Coverage also includes the cost to notify affected individuals.
Private Equity Firms
Product Warranty Inefficacy Coverage
This is a highly specialized performance surety bond or guaranty insurance that was originally designed for investors or manufacturers of alternative energy sources. It provides financial protection if a system does not perform as engineered or designed. This type of insurance encourages investment and development of both alternative energy sources and other types of manufactured products.
Professional Employers Organizations (PEOs)
Professional Employers Organizations (PEOs) PEOs are organizations that manage and administer the human resources functions of their clients by contractually assuming substantial employer rights and responsibilities. They establish and maintain the employer relationship with the workers assigned to them. The types of workers, lengths of contracts, and the contractual obligations are important factors carriers consider when underwriting a specific risk.
Registered Representatives (Mutual Funds) E&O
This coverage insures registered representatives of brokers/dealers against claims brought against them for financial losses caused by their alleged negligent acts, errors, or omissions when they sell mutual funds or variable annuities. Registered representatives are persons registered with the Financial Industry Regulatory Authority (FINRA) who are licensed by the appropriate state securities regulatory agency. Licensed property, casualty or life insurance agents and brokers who also have facilities to sell mutual funds and variable annuities to their clients need this coverage, in addition to their insurance agentsâ€™ errors and omissions policies because of exclusions.
Single Interest Insurance
This coverage protects financial institutions, such as banks, savings and loans, finance companies, and credit unions against financial loss resulting from physical damage to property on which they have made loans. Coverage is force-placed when a borrower does not have the required physical damage insurance. The borrower is required to pay for the coverage as part of his or her installment payments, even though it is only for the benefit of the financial institution. Examples of the types of property covered are autos, pickup trucks and vans, recreational vehicles, watercraft, mobile homes, motorcycles, farm equipment, and household goods. When a loss occurs, the most that the financial institution can recover is the amount it is owed on the property at the time of the claim.
This professional liability coverage indemnifies the insured stockbroker or stock brokerage firm for claims made against it during the policy period. The claims must arise from alleged negligent acts, errors, or omissions in the insuredâ€™s capacity as a stockbroker in the purchase or sale of securities on accounts of its customers. Coverage is available on either a per-claim/annual aggregate basis or on a single-limit annual aggregate. It is subject to a minimum deductible, usually based on the stock brokerage firmâ€™s size.
Third-Party Claims Administrators (TPA) E&O
Third-party claims administrators face legal exposure for negligent acts, errors, and omissions that may occur as they perform professional claims services for others. TPAs are employed by self-insurers, insureds with high deductible plans, and captives to handle workers compensation and commercial general liability claims. Underwriting issues presented by this class of business and coverage include the history of claims made against the TPAâ€™s directors, partners, or officers, the type of administrative services offered, gross fee income, deductible, insurance limits desired, and biographical sketches of the employees.
Trust Department E&O
This is insurance coverage for bank trust departments against claims for damages due to an alleged breach of duty in its administering of estates or trusts or in its managing of real or personal property. Coverage applies only if the breach is caused by a negligent act, error, or omission that is within the scope of the trust department’s duties. These duties include giving financial, economic, or investment advice or rendering investment advisory or managing service to clients.
Trustees and Fiduciaries E&O Pension, Welfare and Employee Benefit Funds
Passage of the Employee Retirement Income Security Act of 1974 (ERISA) brought about one of the most significant changes in the insurance business. In addition to providing guidelines for the federal government to regulate private pension plans, it also greatly broadened the responsibilities of trustees and fiduciaries who directly or indirectly exercise control over pensions or employee benefits that fall under the act. Certain provisions of the act established new standards for prudent action by fiduciaries. The act permits the purchasing of insurance to protect the personal liability of trustees or fiduciaries for their negligent acts, errors, or omissions. This insurance may be purchased using assets of the plan or trust to protect the plan and its fiduciaries as long as the insurer has recourse against the individual trustee.