The BBB policy serves as the basis of the complex program of insurance of financial institutions liability and against crimes. Foreign financial institutions consider such policy to be a matter of prestige and in a number of cases even a must. In Russia the package financial insurance programs of international level are offered by Ingosstrakh.
The program includes three types of insurance aimed at the reduction of bank’s operational risks:
Professional liability insurance for financial institutions.
Advantages of package insurance:
Cost reduction, i.e. two types of insurance in one package cost less than each of them individually.
The policies are complementary: risks insured under one of the programs are excluded under the other type of insurance programs. Economic crimes are very often of a very complex nature therefore it is not always easy to determine whether the loss was caused by a criminal act or employee’s mistake. With a package insurance the Insured person can be certain that all the losses incurred by him will be compensated.
The most extensive financial institution insurance coverage both against criminal acts and mistakes.
ÂÂÂ-covered risks:
Personnel fraudulent activities;
Damage caused to assets (cash, bars, precious metals products, etc) at the facilities of the Insured person or his correspondents as a result of:
Theft, robbery;
Damage, destruction, loss;
Damage caused to assets owned by the Insured person during their transportation;
Losses associated with the false invoices or receipt of false payment orders from the client;
Losses associated with false securities;
Losses associated with acceptance of counterfeit money;
Damage to facilities and in-house equipment caused by theft, acts of vandalism and other intended actions;
Legal costs incurred by the Insured person for defense against the claims, suits, complaints and legal proceedings related to the above insurance events.
Insurance terms:
A mandatory condition for the issue of the ÂÂÂ policy is the preliminary assessment of risk protection – a survey. The survey is conducted by an independent Russian or foreign surveyor company. The main objective of the survey is the assessment of the risk management mechanisms of financial institutions and proposal of recommendations to the Insured person regarding the improvement of his security system.
A survey is conducted both for the customer and the insurance company. The client needs a survey to identify and close the gaps in his security systems, whereas the insurance company can correctly assess the risk due to such a survey.
Usually a survey is conducted prior to concluding an insurance agreement however in special cases it can also be performed immediately upon the issue of a policy, i.e. after the risk has been actually accepted for insurance. In both cases the Insured person shall follow the recommendations expressed in the final surveyor’s report or propose alternative risk mitigation measures.
Insurance premium:
Is determined on the basis of a particular amount fixed after the survey and analysis of information submitted by the bank;
Depends on a number of factors including the rate of the selected liability limit.
Reinsurance:
If the limit of liability exceeds 1 million US dollars the insurance program development and risk spreading is performed by a foreign broker abroad whereas the insurance policy is issued by Ingosstrakh. The major liability share is reinsured in foreign markets.
If the liability limit is below 1 million US dollars Ingosstrakh retains the risk. In this case Ingosstrakh develops programs for a particular client trying to involve in the assessment domestic surveyor companies, whose services are significantly less expensive and of as good quality as those offered by foreign companies.
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