Key Takeaways
- Directors and officers liability insurance protects against shareholder lawsuits
- Cyber liability insurance covers costs of a data breach like notification and credit monitoring
- Professional liability insurance protects against negligent advice that causes financial loss
- Property and casualty covers physical property damage and general business liabilities
- Employment practices liability reduces risks and costs of employment-related lawsuits
Introduction
Businesses in the finance and insurance industry face unique risks that require specialized insurance coverage. As companies that handle sensitive client financial and personal data, they are highly targeted for cyber attacks and lawsuits. This article examines the top insurance policies finance and insurance companies should consider based on their common risks and regulatory requirements.
Directors And Officers Liability Insurance
Directors and officers liability insurance (D&O), also known as management liability insurance, protects business leaders, executives and board members from costly lawsuits and legal defense expenses related to alleged wrongful business decisions and actions. The insurance plays an important role in risk management for companies in heavily regulated industries like finance and insurance where litigation and regulatory risks are higher. It provides vital protection against shareholder lawsuits, regulatory fines and compliance issues. Pricing is influenced by company size, claims history and geographical operations.
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Based on publicly available industry reports and policy pricing data, the estimated average annual premium for D&O insurance for businesses in the finance and insurance industry with NAICS code 52 is $25,000-$50,000. Premium pricing is influenced by factors such as the size of the company (measured by revenues, assets, number of employees), claims history, geographical locations of operations, and the level of coverage desired.
Estimated Pricing: $25,000-$50,000
Cyber Liability Insurance
Finance and insurance businesses handle sensitive customer data and are high-value targets for cyber attacks and data breaches. Cyber liability insurance helps protect these companies from the legal and financial fallout of such incidents by providing coverage for things like breach response costs, regulatory fines, lost business income, and more. The average estimated annual premium for cyber liability insurance for businesses in this industry is $5,000. Cyber liability insurance is especially important for the finance and insurance industry due to the sensitive personal and financial information they process and their exposure to costly litigation and reputation damage if a data breach occurs.
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Based on research, the average cyber liability insurance pricing for businesses in the finance and insurance industry with NAICS code 52 is estimated to be around $5,000 per year. This pricing was derived based on considering the industry’s high risk and exposure to cyber threats and data breaches due to the sensitive financial and personal information they store and process. The pricing also factors in proper cybersecurity practices and controls implemented by most companies in this industry to protect data and systems.
Estimated Pricing: $5,000
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects businesses in high-risk industries like finance and insurance from costs associated with negligent acts, errors and omissions. It covers lawsuits, regulatory actions, and provides risk management services. Some key uses of professional liability insurance for finance and insurance businesses include coverage for errors and omissions in providing professional services, protection against lawsuits from clients alleging improper advice or negligence, defense costs if sued for a covered wrongful act, and coverage for regulatory actions from government agencies and regulators.
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Based on typical industry pricing models, the average annual cost for professional liability insurance, also known as errors and omissions insurance, for businesses in the finance and insurance sector with NAICS Code 52 is estimated to be between $3,000 to $5,000 per year. This pricing is derived based on average risk exposures and claims experience in the industry as reported by major insurance carriers.
Estimated Pricing: $3,000 – $5,000
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) is an important insurance policy for businesses in the finance and insurance industry due to the high risk of expensive employment lawsuits related to hiring, termination, discrimination, and other workplace issues given the sensitive nature of information handled and regulated compliance required in this sector. EPLI provides coverage for legal defense costs if sued, as well as settlements or judgments if found liable. It signals to employees and customers that the company prioritizes workplace culture and compliance. Top use cases of EPLI in this industry include wrongful termination, discrimination or harassment, privacy violations, and retaliation lawsuits. Pricing is typically around $5,000 annually for companies of around 500 employees or fewer.
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Based on research of industry benchmarks, the average pricing for Employment Practices Liability Insurance for businesses in the Finance and Insurance industry with NAICS code 52 is estimated to be around $5,000 per year. This pricing assumes an average size company with 500 or fewer employees and standard policy coverage. The pricing is derived based on risk analysis of the likelihood and cost of potential lawsuits related to hiring, firing, promotion, discrimination in this industry.
Estimated Pricing: $5,000
Property And Casualty Insurance
Property and casualty insurance provides essential risk management solutions for businesses in the finance and insurance industry. It helps protect their assets, operations and finances from unexpected losses and liabilities outside of their control. Some key benefits of property and casualty insurance for these businesses include protecting physical property from disasters, covering liability risks, replacing lost income during interruptions, paying legal costs of lawsuits, and providing peace of mind from catastrophic losses. The most common types of property and casualty insurance policies needed include commercial property, general liability, commercial auto, and additional coverage like commercial crime and excess liability. On average, a finance and insurance business can expect to pay around $12,000 annually for a comprehensive property and casualty insurance program.
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Based on industry data and analysis, the average annual pricing for property and casualty insurance for businesses in the finance and insurance industry with NAICS code 52 is estimated to be around $12,000. This pricing was derived based on common property and casualty insurance policy types needed for this industry, such as commercial general liability, commercial property, commercial auto, and other professional liability policies when applicable. Risk factors specific to this industry were also considered such as cyber risk due to sensitive financial information.
Estimated Pricing: $12,000
Conclusion
By understanding their unique exposures and choosing the right combination of insurance policies, finance and insurance companies can protect their operations, assets, reputation and bottom line from unexpected costs and loss scenarios. Comprehensive insurance planning is important for risk management and compliance in this heavily regulated industry.