Pub. 6 2016-2017 Issue 3

16 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE BRIEN O’CONNOR TEXAS BANKERS INSURANCE AGENCY Insurance Issues and Trends for Banks Today Don’t let yourself fall too far behind, the benefits of regularly updating your ancillary processes in order to better utilize updated technology are easy to assess. I t’s a given fact that banks today cannot operate without the proper insurance pol - icies in place to protect the bank’s assets. However, as one banker said to me early inmy career – “You’re just a necessary evil!” I didn’t take it personally. I knewwhat he meant. And I knew that he appreciated the coverages we provided. Today, there are many different insurance policies found in banks. From the small, yet important, Notary Bonds to the more complex and expensive Financial Institution Bonds. There are policies to protect a bank when it originates loans –Mortgage Impairment. And should insurance lapse on mortgage property, banks have Forced Place Insurance. Insurance covers the buildings and contents. We insure your employees against illness with Group Health Insurance; and work related injuries thanks to Workers Compensation. We protect the bank’s exposure to liability in automobile claims. In fact, my largest claimour agency has ever paid was an automobile claim. It totaled $4.5 million! Our second was a roof claim of $2 million. We insure you should someone sue the bank for a decision made inside the bank through Director and Officers’ Liability. And today we insure the bank should it be hacked and you’re faced with a lawsuit or the expense of covering a breach with Cyber Liability/Mitigation Insurance. With so many policies, a banker can’t be ex - pected to know all the coverages, exclusions, conditions and definitions found in these policies. That’s why banks depend on knowl - edgeable insurance professionals. However, I feel that certain officers in a bank should have an overall understanding of what these policies cover and do not cover. In this series of articles, I will attempt to point out to bankers the key components of these policies. While each policy can be an hour long (or more) lecture, I’ll attempt to identify the areas that a banker should be keenly aware of, what the policies are intended to do and what they will not do. Financial Institution Bonds (FIB) When I speak to a bank’s board of directors about FIBs (sometimes still referred to as a Blanket Bond) I will often begin with this statement: “Blanket Bonds are for stealing.” That kind of keeps it simple. If someone robs the bank, embezzles, produces a forged check, *Looking out for the “Gotchas” in insurance policies