Professional Liability and Financial Institution Insurance

For many in the financial industry, community and corporate banking alike have seen their fair share of concerns over the scandals related to the financial crisis dating back to 2008.

Litigation against the directors and officers of the more than 330 financial institutions that have failed since that period is an indication that Financial Institution Insurance is much-needed coverage.

Shareholder claims have been on the rise, due to improprieties, which only adds to the plethora of risks resulting in a difficult environment for independent, locally owned and operated institutions. This makes providing financial stability in many communities increasingly difficult.

Professional liability policies for banks

Professional liability coverage has become increasingly complex in recent years. It’s important for brokers to educate themselves about these coverages as these changes come about. Then they’ll also be able to conduct a thorough review of these policies in conjunction with other coverages a bank must have in place, including property/casualty, general liability, etc. in order to identify any gaps that could possibly leave the door open to potential risks.

Directors & officers (D&O) liability

D&O liability policies provide needed coverage for individuals against impending lawsuits arising from their roles as directors or officers for alleged acts of improper establishment of corporate policy. Banking institutions often provide coverage for directors and officers with respect to employment policy or actions taken with regard to specific employees, shareholder disputes, as well as failure to comply with Securities and Exchange Commission rules and other federal regulations that apply to corporations.

A D&O policy is essential for all banks where citizens often serve on the board of directors. A policy that fails to provide broad coverage will run the risk of not being able to attract and retain leadership, as people will be wary of exposing themselves to personal liability.

It’s important to make sure all directors and officers, whether appointed or elected, are covered under the bank’s D&O policy. In addition, all employees should be covered under an employment practices policy as well. Banks must also consider whether or not independent contractors or temporary workers should be included in their coverage. Speak to your insurer about different types of Financial Institution Insurance required to address your needs.

Theft, Identity Theft and Insurance For Banks

Think about the fact that banks possess a lot of material items (cash, jewelry, gems) belonging to others and kept in their institutions for safekeeping. They also have access to a lot of personal and confidential information. While bank robberies still do occur from time to time, the more significant concerns have to do with technology (cyber theft), and dishonesty in the workplace.

That is certainly a lot of issues to address and a lot of risks and exposures to deal with on a daily basis. Insurance for Banks is the coverage that addresses all of these issues and more, from ATM machine theft and burglary, to forgery, fraudulent mortgage schemes, debit card fraud, and much more. There are so many areas to address, but well focus on just a couple of the primary issues here.

Debit card coverage

We now live in the age where cash is king is no longer a prevailing theme among consumers. We now live in the plastic age where the majority of purchases are made using credit and debit cards. Debit card coverage provides coverage for losses resulting directly from the fraudulent use of a debit card to obtain cash or pay for products or services by gaining access to an electronic payment device. This is provided that such a device, as part of the transaction, electronically verifies the customers available funds in the customers account at the insureds bank.

Destruction of Data or Programs by Hacker

Cyber crimes are a great concern for the banking industry here in the US and institutions worldwide. All banks are urged to carry a policy designed to cover any losses resulting directly from the malicious destruction of, or damage to, computer programs owned by the bank, or for which the bank is legally liable. This includes all confidential info stored within their computer systems.

Protection is usually included for the cost of duplicating damaged or destroyed data or computer programs from backup sources. If the computer programs cannot be duplicated from a backup, the insurance company will pay the additional costs to restore damaged or destroyed data.

Again, there are a lot of ways to infiltrate the banking industry through illegal means in order to gain access to funds or valuable information. While safety is a priority, attacks will occur and losses will be the result. Insurance for Banks is just one line of defense against the many crimes banks must endure in an attempt to keep their customers feeling secure.