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Background
Richard Sheehan writes:
During the last 30 years of my career as an insurance broker I have arranged insurance cover and have acted as a consultant to many different financial institutions. This involved the analysis of crime and liability claims and also the risk exposures facing financial institutions.
Over the years many technical advances have altered the ways in which these exposures arise. Besides this the regulatory climate has changed in such a way that the accountability burden placed on financial institutions had increased. Coupled with this is a tendency towards systemic (multiple) losses. In some cases this can amount to billions of dollars.
The constant in all of this is the propensity for some people to act dishonestly. Financial institutions are seen as a depository of wealth. As a result they can become a target for the criminal. In addition mistakes can arise especially nowadays where products and processes have evolved in complicated ways. Couple this with greater accountability and there is an increased tendency to hold another party liable when losses arise. So, the norms whereby mistakes were rectified in the past do not apply nowadays. The compensation culture encourages people to litigate. This is despite the fact that litigation can be an uncertain process, which may also be expensive and is frequently time consuming.
How does this apply to you?
Where insurance is involved there may be disputes regarding the interpretation of coverage, since the insurance policy will also be subject to the other policy terms. These encompass exclusions and conditions that need to be overcome or met before the indemnification will be provided.
Click here if you are a policy holder.....
Click here if you are an insurer.....
Policy Holders
You rely on the policy wording responding to your loss. Understanding the way in which the coverage operates and exclusions and conditions apply is important. Frequently there is a high profile element to the loss and the board of the financial institution will be keen to obtain a speedy settlement to assist in reducing any reputation risk that might arise.
Also, there can be technical difficulties with an insurance policy. For example, you are required to co-operate in the claims handling process and this obligation needs to be fulfilled.
So, there is a growing requirement for assistance in the claims process. The experience which I have built up is therefore offered to help resolve problems when claims arise
Also, you will need insurance cover for the future to protect your company against day-to-day exposures to crime and liability risk. Preserving harmonious relations with your insurers will be of benefit. Therefore the amicable settlement of any claims that arise will help to achieve this.
Insurers
You may now find that you are expected to respond to losses arising from unforseen exposures. New financial products and practices and new ways in which suits are brought by plaintiffs may never have been contemplated at the time when the insurance cover was arranged.
Also, there can be technical difficulties with an insurance policy. As an example, you may rely on reinsurance protection. It is important that you receive timely notification of losses so that you can then advise your reinsures to preserve your own rights of recovery.
This ought not to concern the financial institution because their contract is with you and not with the reinsurer. However they are required to co-operate in the claims handling process and this needs to be appreciated by the client.
So, there is a growing requirement for assistance in the claims process. The experience I have built up is therefore offered to help resolve disputes when claims arise.
After all, if you specialise in the field of financial institutions insurance you need to satisfy your client's expectations and maintain the relationship going forward.
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