Insurance Solutions

Most losses arising from operational risk have no material impact on the profit & loss account. However, the potential cost to defend liability claims, coupled with regulatory enquiries and criminal investigations, is difficult to assess. The cost can be significant, if compensation for damages were to be considered.

Unallocated reserves on the balance sheet to cope with such eventualities are likewise costly. Therefore, in order to protect the profit & loss account and ultimately the firm's balance sheet from potentially larger losses, the transfer of risk to an insurance solution is advisable.

Financial lines insurances are designed for loss scenarios with high impact and low frequency. Such insurances do not replace but rather complement the corporate risk management.

Insurers continuously innovate products to deal with emerging risks. Hence, there is a wide range of insurances available to address a firm's individual needs and risk exposures:

Claims that may trigger at the same time the D&O liability, professional indemnity and the fidelity insurance are not uncommon to financial institutions. That said, combined insurance solutions that provide cover for different exposure in one and the same policy.

They have been developed by the insurance industry for a number of financial institutions and service providers like banks, fund managers or independent asset managers, and for pension foundations or pension trusts. Combined insurance solutions provide the advantage that certain coverage gaps are avoided from outset.

For most companies, insurance represents one of their biggest investments and their largest source of contingent capital. The main purpose of insurance is to protect their balance sheet, and to reduce volatility in the profit and loss account following a large loss.

The challenge for insurance buyers is raising the awareness of the value of insurance beyond that of a commodity, and articulating how individual insurance covers can contribute to the financial strategy and financial modelling of the organisation.

A standard product, - the name says it all - often does not match the client’s individual risk profile and maybe leaving the client unaware of critical gaps in coverage. Leading insurers often provide 'off-the-shelf' insurances with impressive features and attractive pricing. Such policies are sometimes very efficient to bind, no annoying questions asked.

However, most of the times these standard products contain unusual exclusions that limit coverage and/or the insured has to comply with specific contractual obligations as a condition precedent to an insurance claim made and successfully settled. We help our clients to eliminate such clauses from their policies.