Gigantic financial institutions are being formed by mergers and acquisitions: NationsBank/BankAmerica, BancOne/First ChicagoNBD and Wells Fargo/Norwest to name just three. So why consider this market? Look at our own industry. Mergers and the combining of companies' resources for joint ventures are a daily news story. It just means that adjustments and attitudes have to be made in order to identify potential business. Approximately 9,000 banks need the services of professional agents, not to mention credit unions, savings & loans and finance companies.
Let's look at the universe that makes up the financial institution market. Besides banks, it consists of savings and loans, mortgage brokers, credit unions, thrifts, finance companies, investment brokers and trust companies.
For the most part, $1 billion in assets is the dividing line for acceptability. Some target above that level and some below. Some MGAs target small community banks under $250 million--which provides a large number of prospects.
General liability can be placed with limits up to $150 million. Property coverages are generic and the limits are high.
This class of business will require extreme attention to special coverages and how they tie into the overall package. Bankers blanket bonds cover the loss of money, securities, bullion, precious metals, stones and jewelry on the insured's premises and while in transit. Losses can occur from employee dishonesty, burglary and robbery, mysterious disappearance, fraud and forgery. Other forms of crime coverage, such as kidnap and ransom, extortion, ATMs and safety deposit vaults are optional. Coverages can, and in many cases should be, obtained as a separate policy. For instance, kidnap and ransom should be a separate policy because the insured and insurer want the coverage and persons covered to remain confidential.
As more financial institutions go online with their services, exposures increase for EDP, including (everyone's favorite) Y2K. Carriers take differing views of Y2K and where the losses, if any, will occur. It is estimated that 90% of the businesses in the financial institutions class have become Y2K compliant. When working with financial institutions, make sure that their compliance includes a written plan and that an individual with direct responsibility is assigned. Y2K should be offered as a separate policy, not endorsed to the existing package. Above all, don't let the coverage depend, by default, on your E&O policy.
Professional liability is an important part of the protection for financial institutions. The type of business conducted determines the need for various forms. Among the most noteworthy are D&O, E&O, outside directors liability, bankers professional liability, investment advisors E&O, and venture capitol E&O. The gravity of losses occurring from these can be devastating, with trust departments, estate planning, settling of estates, management of pension funds, and insurance operations as major exposures.
This class of business can provide many opportunities for agents who investigate the hazards and educate themselves on coverage solutions. Specialists in the market are willing to assist agents in meeting these goals.
Markets that specialize in various financial institutions and have responded to our survey are as follows:
Arlington/Roe & Company, Inc.
* P.O. Box 80803
Indianapolis, IN 46280
Contact Helen Parker, bond manager
Phone: (800) 878-9891
Fax: (317) 259-4106
Arlington/Roe is an MGA operating in the Midwest providing D&O, EPLI, trust department, computer crime, and fiduciary liability to credit unions, banks, saving & loans, finance companies, stock brokers and insurance companies. Carriers are Fidelity & Deposit of Maryland and Capitol Indemnity Corporation, both A rated.
American Underwriters Agency, Inc.
* 4343 Lincoln Highway, Ste. 110
Matterson, IL 60443
Contact John Walker, president
Phone: (708) 748-9550
Fax: (708) 748-9540
Web site: www.auaagency.com
E-mail: auahome@aol.com
This MGA provides a limited list of coverages such as blanket LSI, CPI, credit life & health in all states with a variety of A rated carriers.
Russell Bond & Company, Inc.
* 295 Main St., Ste. 866
Buffalo, NY 14293
Contact Anthony V. Ambrose, ASLI/Kurt C. Bingeman, CPCU,
ASLI
Phone: (800) 333-7226
Fax: (716) 856-8220
E-mail: info@rbcoins.com
An E&S broker, Russell Bond targets community banks (less than $1 billion in assets), insurance companies, investment advisers, mortgage brokers, mutual funds, commercial banks, SBIC's broker/dealers. It places D&O, E&O, bankers professional, EPLI, standard bonds, mortgage interest/impairment, single interest, GAP coverages, secured creditor, and fiduciary liability with leading carriers in AL, CO, CT, DE, MA, NE, NH, NJ, NY, OH, PA, and WA.
Capitol Indemnity Corporation
* P.O. Box 5900
Madison, WI 53705
Contact John Hollander
Phone: (608) 231-4450
Fax: (800) 798-2029
This insurer writes in IL, IN, MN and WI, providing trust E&O, excess FDIC coverage, mortgage, and IRA/Keogh fiduciary liability. Commercial banks, savings & loans, and savings are its target markets. Limits available are $3.5 million on financial institution bonds, and $2 million on D&O.
Centurion Corporation
* P.O. Box 959
Hanover, NH 03755
Contact Thomas F. Canfield,
vice president
Phone: (800) 258-3056
Fax: (603) 643-2740
Web site: wwwcentcorp.com
E-mail: tom@centcorp.com
Through Fidelity & Deposit and Executive Risk, this E&S broker writes in all 50 states for community banks, with assets less than $250,000 for lenders E&O, IRA/Keogh, EPLI, and fiduciary liability. It provides limits of $25 million.
Chubb Corporation
* 15 Mountain View Road
Warren, NJ 07059
Contact Evan Rosenberg
Phone: (908) 903-3396
Fax: (908) 903-3246
Web site: www.chubb.com
E-mail: erosenberg@chubb.com
This insurer works through appointed agents and Chubb Custom Market, an E&S company for surplus agents. It provides special coverages for all types of financial institutions up to $150 million for D&O, mutual fund E&O, bankers professional liability, and E&O for insurance companies, investment advisors, and venture capitalists. This insurer also writes fidelity coverages.
Cooney, Rikard, & Curtin, Inc.
* P.O. 59689
Birmingham, AL 35259
Contact Susan Phillips
Phone: (800) 824-1709
This E&S broker writes the following coverages in all states except NY and NJ: D&O, professional mortgage protection and financial guarantee with limits up to $50 million placed with A rated carriers.
Fidelity & Deposit Company of Maryland
* P.O. 1227
Baltimore, MD 21203
Contact Michael Dilworth/Tom Schields
Phone: (800) 821-4655
Fax: (410) 659-3226
Web site: www.fidelity and deposit.com
E-mail: michael.dilworth@Zurich.com
An insurer writing in all states through its A rated companies, F&D targets large risks with $3 billion in assets or better. Risks included are financial services firms, thrifts, credit unions, stockbrokers and investment firms.
Gulf Insurance Group
* 388 Greenwich St., 21st Floor
New York, NY 10013
Contact George Biancardi
Phone: (212) 816-0514
Fax: (212) 816-5147
An insurer whose main focus is financial institutions with over $1 billion in assets with a wide range of coverages.
McClaugherty Insurance Agency
* P.O. Box 7841
Horseshoe Bay, TX 78657
Phone: (800) 651-8151
Fax: (830) 598-6807
E-mail: Butche@281.com
Operating as an E&S broker and MGA, this firm specializes in credit-related property and foreclosure-placed business. This includes mostly manufactured home credit and commercial loan credit coverage in all states with various carriers that are A rated.
MultiGard Insurance Agency
* P.O. Box 245008
Louisville, KY 40224
Contact William C. Horan III, agency director
Phone: (888) MULTIGARD
Fax: (502) 589-3418
Web site: MULTIGARD@aol.com
MultiGard is an MGA writing in all states, territories, and possessions of the U.S. It specializes in banks, savings & loans, credit unions, mortgage bankers and finance companies. Coverages include lenders single interest, collateral protection, forced-placed insurance, GAP protection, mortgage protection, residual value, contingent and excess liability. Carriers are American Modern Home, First American Insurance, Lloyd's of London, Markel American Insurance, and United Financial Casualty Company.
North Island Facilities, LTD., Professional Division
* 30 Park Ave.
Manhasset, NY 11030
Contact David L. Vicari
Phone: (800) 664-3776
Fax: (516) 365-7392
Web site: nifpro@aol.com
North Island is a financial services intermediary writing all classes of financial institutions in all states except AK, HI and WA. It utilizes the following carriers to write D&O, EPLI, bankers professional liability, and trust department E&O: Reliance, AIG, CNA, Executive Risk, Admiral, Great American, Gulf, Chubb, Lloyd's, Virginia Surety, and Genesis.
Northland Insurance Companies
* 1295 Northland Dr.
St. Paul, MN 55120
Contact Steve Hunziker
Phone: (800) 237-9334
Fax: (651) 681-3050
Web site: northlandins.com
E-mail: steve.hunziker@northlandins.com
An A rated carrier, Northland provides limits of up to $10 million for D&O, EPLI, fidelity, and E&O in all states.
Scarborough
* 10 S. LaSalle St.
Chicago, IL 60603
Contact Richard J. Maka, AVP Marketing
Phone: (800) 832-6339
Fax: (312) 630-7421
Web-site: scarboroughco@aon.com
Scarborough is an MGA placing D&O, EPLI, bonds, property and casualty and MIP on common banks and thrifts through A rated carriers Gulf Insurance Group and Royal & SunAlliance. Limits up to $10 million are offered in all states.
Seattle Specialty Insurance Services
* P.O. Box 1781
Snohomish, WA 98290
Contact Rick Pedack/
Steve Santos, AVP
Phone: (800) 597-1866
Fax: (360) 568-5066
1164 Bishop St., 4th Floor
Honolulu, HI 96814
Phone: (808) 522-2050
Fax: (808) 522-2060
This firm is an MGA operating in all states, Puerto Rico, the Virgin Islands, Guam, Saipan, and American Samoa. Special coverages include collateral protection, mortgage fire, vendors single interest, and flood insurance. Mortgage fire limits up to $1,000,000 and guaranteed issue collateral protection of $75,000 can be placed through Interstate Insurance Group and United Fire & Casualty Company. It also is offering third-party administration of hazard insurance on behalf of lenders.
S.E.S. Insurance Services
* 17782 E. 17th Street, Ste. 200
Tustin, CA 96212
Contact Paula Gilmore
Phone: (800) 955-4SES
Fax: (314) 730-5075
This is a wholesaler operating nationally with flexible limits targeting trusts, REOs, mortgage impairment, and forced placed business. Its markets are Cigna, St. Paul Fire and Marine Insurance, and Agriculture Insurance.
Shand Morahan & Company Inc./
Evanston Insurance Company
* 1007 Church Street,
Shand Morahan Plaza
Evanston, IL 60201
Contact Gerry Albanese
Phone: (847) 866-2800
Fax: (847) 866-0778
This underwriting manager writes municipal bonds with limits of up to $5 million placed through Evanston Insurance Company, an A rated carrier.
Swett & Crawford
* 515 S. Figueroa Street, Ste. 600
Los Angles, CA 90071
Contact Jason White/James Kuchta
Phone: (213) 439-3400
Fax: (213) 439-3454
E-mail: jasonwhite@swett.com
Swett & Crawford acts as an MGA on EPLI and for Lloyd's. It writes other financial institutions business as an E&S broker. Limits of up to $100 million are available on D&O, bankers professional liability, EPLI, bankers blanket bond, P&C, K&R, and fiduciary liability in all states. *
©COPYRIGHT: The Rough Notes Magazine, 1998