Members of the insurance industry often refer to the state of the market as "soft," "hard" or "tightening." Banks in the mid- to late 1980s and early 1990s were faced with insurance companies that completely stopped providing Financial Institution Bonds and Directors and Officers Liability (D & O insurance), dramatically raised insurance premiums, reduced coverages available in these policies and refused to even insure some banks. That was the last "hard" market in banking. Some insurance companies that had stopped writing bank insurance coverages came back. As a result, for the last several years, a "soft" insurance market has been seen. This means that the availability of insurance coverages for banks is relatively easy to obtain, insurance coverages are broad and the cost is not expensive. But today, the insurance carriers are beginning to pull back due to worries about potential exposures they face on the West Coast, Florida and the Midwest. This is called a "tightening" of the insurance marketplace.
Pages to are hidden for
"The ripple effect"Please download to view full document