ABA Banking Journal - January 2009 - (Page 26)
BANK INSURANCE REPORT Proof There’s capacity—for the right risk. Just be prepared to show and tell required D espite the scourge of subprime and a gloomy, damp economy, banks can still pick up directors and officers insurance and liability coverage of other types— although struggling banks, even banks with a hint of “dry rot” in the portfolio, will pay a higher price to get covered. Those who can demonstrate overall financial fitness will be able to be choosier, getting better value for the dollar even as the recession infiltrates. Even so, strong performers will need to demonstrate vitality by explaining themselves and making a case for their business plans. Few companies on either side of the insurance contract will offer the benefit of the doubt without documentation. As part of this, a given bank’s financials and risk management systems data may well be scrutinized more by insurers than in the recent past—and vice versa. Daniel Baltz, senior vice-president of insurance risk with Atlanta-based SunTrust admits that when it comes to purchasBy Lauren Bielski, senior editor ing D&O coverage in particular, he and his cohorts “live in interesting times.” “While we haven’t changed our purchasing strategy, we are paying attention to all the details,” says Baltz. “We have many carrier relationships and we want each underwriter to feel comfortable with our bank and understand our risk profile.” SunTrust, for example, applied for a second infusion of “TARP” capital in early December, taking it to the maximum amount. But as the Atlanta-based regional has in recent years, as a matter of routine, opened up its books—and its intentions—in the spirit of cooperation, so in current events its carriers will be kept in the loop. As part of its work with insurers, the bank has hosted gatherings with underwriters and other insurance executives to share information and make the underwriting process “as clear and open as possible.” Information-rich collaboration of the sort SunTrust is practicing now will become more prevalent among banks of all sizes. Walter Grote, senior vice-president, Financial Institutions, The Travelers Companies, Inc., St. Paul, Minn., agrees that more Subscribe at www.ababj.com 26 JANUARY 2009/ABA BANKING JOURNAL
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