Banking Insurance News for
the Banking Industry
on Insurance VOLUME 5 NUMBER 1
Risk Management 101
203 West 10th Street
Austin, TX 78701-2388
(800)318-4142 By Brien O’Connor
(512)479-7436 Fax President, BIA
his term may be familiar to some
of you, or it may be completely
Please Route to:
foreign. As insurance pro-
fessionals, we at Bankers Insurance
Agency strive to be the best risk The practice of han-
managers we can for our customers –
Texas banks. dling risks by way of
Since 1989, the Texas Bankers reduction, elimina-
Association has had an insurance tion or transfer of
affiliation to help its members with Risk
Management. Today that affiliation is risk, with the latter
Bankers Insurance Agency. commonly achieved
With over 50 years of combined
experience, the team at Bankers through insurance.
Inside: Insurance Agency stands ready to help The National Underwriter
you, the banker, with any insurance need
your bank may face.
Tips from the In 1989, the TBA board took a bold step policies available to protect your
Treehouse! and bought ownership in a new insurance exposures.
company called BancInsure. BancInsure Daily, we analyze the exposures of Texas
was created to provide oftentimes banks, helping CEOs make informed
Insurance difficult to place insurance coverages–
Rates decisions regarding their risks. We do this
mainly Financial Institution Bonds and through several methods: checklists or
Why Use Directors and Officers Liability
insurance. Today, with over 300 banks
applications; financial information (i.e.,
Call Reports and audits); on-site
Bankers throughout Texas as customers, the inspection of each location; previous loss
Insurance BancInsure story has been a true success history; and occasional reviews of leases
for the association, but more importantly
Agency? for the banks in Texas.
Once we have the information we need,
Watch for our Ever since its entry into Texas, we then assist the banker in the best way
BancInsure and the professionals at to approach risks. It may be to Avoid
“Question Man” Bankers Insurance Agency have done Risk by eliminating an activity or
monthly postcards great things for the banks in the state. exposure. For example, each year a bank
answering common First and foremost, BancInsure has would sponsor the local fishing
claims questions: created a competitive environment tournament. Alcohol was provided to the
forcing the competing insurance carriers fishermen, and the event would last all
to lower their prices–to the betterment weekend long. This obviously was a huge
of the banks in the state. Second, our exposure to the bank. Although
team at Bankers Insurance Agency has ‘incidental’ liquor liability is provided
continuously worked to improve the under most General Liability policies,
coverages provided to your bank, the bank’s policy wasn’t meant to cover a
ensuring that you have the broadest bunch of drunken fishermen!
Cont. on back page…
Why Use Bankers Insurance Agency?
his week, I was visiting a bank in
the Fort Worth area when we got
to the topic of their Commercial
Package Policy. The banker explained to
me that, while they trusted us to do their
Bond and D&O insurance, they owned
their own insurance agency and wanted
to use it for their Commercial Package
insurance. I told the banker that they
might want to reconsider this idea for the
1. Expertise. At BIA, all we do is insure
financial institutions. We insure over
300 banks throughout the state.
2. We understand your exposures.
With over 50 years of combined
experience and 15 years of insuring
only banks, we know your exposures
better than your own agency. They
may be great at insuring contractors
or bowling alleys, but at BIA, banks
are all we do.
3. Errors and Omission exposure.
You may not be aware of this, and
your agent may not be as well, but in 4. Current carrier charging too
EVERY Agent’s Errors and Omissions much. Unfortunately, in the
insurance policy there is an exclusion insurance world, if the insurance
for “Controlled Business.” This means company knows that the business is
that if there is a loss involving a controlled by the insurance agency,
business that is owned by the agency sometimes they will charge more than
or controlled by the parent of the they should. This is just a fact of life.
insurance agency, the E&O policy will When competition enters into the
not respond. For example: The bank equation, it’s amazing how sharp the
suffers from a fire to its property (or underwriter’s pencil may be.
any loss), which was not covered
because of an oversight by the agency. 5. Broader coverage. Bankers
Should the bank attempt to sue its Insurance Agency uses BancInsure
agency for the negligence, the E&O exclusively for its insurance carrier.
policy would deny the coverage. Why? Because TBA owns an interest
in BancInsure. In addition,
BancInsure has the broadest policies
for banks in the insurance market
place. The BancInsure Advantage and
Advantage Plus policies were designed
specifically for banks. There are
added endorsements geared for the
banking world exposures.
At your next insurance renewal, why not
give BIA a call to see how we can help you
save money and, more importantly, im-
prove your bank’s Risk Management
Volume 5 Number 1 Winter 2004 Page 2
Why are my insurance rates going up?
Latresa Powell, CIC
Tips from the
ccording to the ISO (Insurance
Service Office), fourth quarter
losses are the highest in 10 years.
U.S. Property & Casualty Insurers paid
$12.8 billion to homeowners and busi- F. Talk losses!!
nesses for property losses from 21 cata- It is important for all
strophic events last year. There were business owners to
more than 1.6 million property and auto make their employees
claims filed for the year. aware of what losses
The catastrophic events affected 39 do to the bottom line.
states, with California suffering the Review all workers compensation losses
highest insured losses at $2.1 billion, to see if there is a frequency problem or a
followed by Texas at $1.5 billion. The 21 workplace hazard you have not recog-
events ranged from wildfires to wind and nized. Keep your premises safe for your
thunderstorm. Here is a breakdown: customers. Always review any on-site
2003: $12.8 Billion in losses accident to see what caused it and what
might be done to prevent it from happen-
2002: $5.9 Billion in losses ing again.
2001: $28.1 Billion in losses G. Develop a good relationship with
(largely due to Sept. 11 losses) your insurance agent.
2000: $4.6 Billion Select an agent who is an expert in the
type of business you own and who in-
1999: $8.3 Billion sures multiple clients like yourself.
1998: $10 Billion Work with your agent and make sure
they are aware of all business activities
How do you as a consumer prepare and functions. Once a year, ask for a full
for possible increases in premiums? review of your coverage. Require on-site
A. Raise your policy deductibles. visits to all of your locations. If you
develop a loss history that is not too
B. Know your policy coverage.
pretty, ask your agent for loss control
This helps you decide what options you
assistance and risk management advice.
really need to keep and the ones you
Clients choose our agency because we
insure only banks. That is our expertise.
C. Don’t turn in the small claims. We devote our time and attention to
A $60 windshield repair should never be insurance matters that are important to
paid by your insurance company. If in your industry.
doubt, call you agent.
H. Be proactive rather than reactive.
D. At least once a year, ask for Plan now for what may come tomorrow.
loss history on your policies. Bankers Insurance Agency is here to help.
This will give you first hand information Please give us a call if you have insurance
about claims that are being paid under questions or need risk management
your policy. Remember, your claims assistance or loss control advice. ●
history is very similar to a credit score.
The lower your losses, the better your
Come visit us at booth # 506
E. Remember your insurance policy
is not a maintenance policy.
It is your responsibility to keep and
maintain your property in good condition.
The insurance industry began with the
intent to protect us when a catastrophic
event strikes, not pay for damages be-
At TBA’s 120th Annual Convention
cause the property is not maintained.
April 28-30, 2004 in Houston, TX
Page 3 Volume 5 Number 1 Winter 2004
Risk Management 101 (cont.)
Another way to help reduce exposures Finally there is the Transfer of Losses.
is Loss Prevention. A bank up in the This may be accomplished by things such
Panhandle had beautiful glass doors. as employee leasing, subcontracting
And yes, customers would walk right operations, etc. However, the most
into them! Placing decals with the common form of risk transfer is the use
bank’s logo on the doors helped solved of insurance contracts.
that problem. In addition, during the In our next article, we’ll begin to take a
winter months, employees were look at the main components of a bank’s
slipping and falling in the parking lot insurance portfolio. They are the
around the same area. It turns out the Financial Institution Bond, Directors and
area in question was grass with a slight Officers Liability Policy and Commercial
rise to it. The bank cut through the Package Policy. ●
grass and laid a small sidewalk that
could be kept clear and salted when it
We can also help bankers Reduce
Losses. A bank in a rural community
was robbed. The bandits jumped up
and over the counter and wiped out the
teller drawers. It was suggested by our
company claims department that the
bank should add windows to the teller
area and to place any excess cash in
unused safe deposit boxes in the vault.
203 West 10th Street
Austin, TX 78701-2388