Financial institutions are characterized by managing money for third parties and are therefore exposed to many risks. Any risk that occurs may cause enormous damage and lead to significant claims against the company and its officers.
The risks of financial institutions and their officers are from claims by investors, customers, embezzlement, cyber risks, and regulatory investigations. This insurance plan suits investment portfolio managers, consultants, investment houses, insurance companies, etc.
Directors and Officers Liability Insurance (D&O)
Protects the officers against personal claims against them filed by third parties for negligence in the management and supervision of the business. For example, investor claims, customer claims, and employer-employee relations claims. The D&O policy also covers investigations by regulatory authorities.
Financial Institutions Professional Indemnity Insurance (FIPI)
Insurance is very important and must be purchased at the start of the activity. Unlike directors’ and officers’ insurance, professional liability insurance protects the company itself from claims filed by a third party for negligence in the provision of its professional services.
Because most of the exposures of financial institutions may be exposures covered by the D&O policy, it is useful to find a plan that combines the errors & omissions policy and the D&O insurance under the same policy or alternatively purchase the policies from the same insurer.
Considering the continued increase in cyber incidents, financial institutions are at constant risk and may experience a cyber incident at any moment. One cyber incident can cause a huge loss to a company, its customers, and its reputation.
The insurance protects the company from claims by third parties because of a cyber incident (for example, claims for information leakage). The insurance also protects against loss caused to the company itself because of a cyber incident (1st party coverage): loss of income as a result of the incident, payment of a ransom, initial response team (including an attorney, forensics, and public relations), payment of reporting expenses Various privacy regulations (Notification Costs), expenses for regulatory investigations (CCPA/GDPR).
This insurance covers loss caused by crime of funds and/or securities by company employees and/or third parties. Financial institutions that manage funds of third parties and even transfer funds are constantly exposed to embezzlement both by an employee and/or third parties.
This is the basic insurance that provides coverage for damages caused to the structure and contents of the business. In addition, the insurance provides coverage for third-party claims arising from bodily/property damage caused to the third party through the company’s negligence. In addition, it is important to take care of employer liability coverage. The insurance provides coverage to the employer due to bodily harm caused to the company’s employee due to the employer’s negligence.