TRENDS
Renewing your Bank’s Insurance in the COVID-19 Era Renewing insurance in today’s market can be more difficult and time-consuming than ever before. The hard market has developed after several years of significant catastrophic losses and now has now been exacerbated by M & A risk, COVID-19 liability and business shut-downs. Business shut-downs have caused underwriters great concern due to the impact on loan portfolios. All of this has led some carriers pull out or pull back from the banking sector. Also, beware of rising premiums, stricter policy provisions, lower limits, changing deductibles and more. The hardest hit are banks over $500 million in assets and publicly traded institutions. The carriers are looking for a 15% to 30% increase in premiums for this sector. Also, multiyear options are becoming rare. Smaller community banks are generally seeing 3% to 10% increases. One area of good news is that continued stiff competition in the cyber insurance market has limited increases from zero to 5%. Following are the top ten questions underwriters are asking financial institutions in this mid- and post-COVID environment. Preparing responses in advance will help put your financial institution in the best position to successfully negotiate your insurance renewal.
KEY FINANCIAL INSTITUTION UNDERWRITER QUESTIONS
1. 2020 financial performance to plan – YTD and projected year-end 2. Capital plans – is there a capital raise in your future? 3. COVID-19 impact on operations – work from home, COVID cases in market, re-opening, furloughs and layoffs
4. Have you strengthened cybersecurity measures to secure remote operations? 5. Industry sector exposure: Oil & gas / energy, transportation, retail trade, hospitality, recreation and education 6. What percentage of total loans were deferred or restructured? What percentage are asking for a 2nd deferral? 7. Bank stress testing – any recent updates and what are the primary assumptions? 8. How many PPP loans did the bank originate? What was the dollar amount? 9. Regarding COVID-19 specifically, what is your communication plan with your shareholders? 10. When was your last regulatory exam? Were there any criticisms? Answering these questions in a crisp, clear and positive manor will help lead to the best renewal outcome. Your insurance broker should be contacting you at least 60 to 120 days in advance of your policy renewal date to discuss creative solutions to ensure your organization is adequately protected at the most affordable cost. Please reach out to your local risk and insurance professional or feel free to contact Kris St. Martin at 763-549-2267 or kstmartin@cbiz.com.
Kris St. Martin
Bank Program Director CBIZ Insurance Services, Inc. Preferred Service Provider
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