Skip to main content
Custom print
  Versions

 
Download Original PDF

Insurance Policies

Effective from Jan 31 2025 - Jan 30 2025
To view other versions open the versions tab on the right

4.

YES

NO

COMMENTS

  1. Is there a written corporate risk financing policy which defines the methods to be used by the bank for insuring itself by considering all the methods available i.e. conventional insurance, loss retention guidelines, parent captive, risk retention group, finite insurance etc.
   
1.1 Has this plan been approved by the Board of Directors
1.2 Does this policy address loss retention guidelines by addressing the following:
  * Effect of risk financing options on earnings, budgets and balance sheet ?
  * Risk aversion (loss tolerance) by management and the Board of Directors ?
  * Relative cost of risk funding options in the existing market ?
  * Projection of expected operational losses and possible variance from expected levels ?
  * Statutory, regulatory, or contractual limitations on risk retention ?
  1. Are all corporate risk financing policies and guidelines formally reviewed by the Board of Directors on at least an annual basis ?
  1. Are internal risk financing options (self insurance) used which are commensurate with the financial resources of the institution, dispersion (or aggregation) of risk, and established policy ? Do these options include:

*    Contractual transfer of risk ?

*    Unfunded retention

  • -    Straight deductibles ?

  • -    Aggregate deductibles

  • -    Allocation of small/high frequency losses directly to responsble units ?

  • -   Absorb large and/or random losses at the

corporate level ?

*    Funded retention ?

*     Single parent captives ?

4. Are conventional insurance options analysed Do these options include ?

*    Conventional insurance

  • -   Banker's Blanket Bond ?

  • -    Electronic and Computer Crime coverage

  • -    Directors and Officers (D&O) Liablity Coverage?

  • -   Professional Indemnity Coverage ?

  • -   Environmental Liability ?

*    Risk retention groups, group captives and risk sharing pools?

*   Agency Captives ?

*    Rent-a-captive ?

* Finite risk financing ?

5. Do formal policies and procedures exist to coordinate conventional insurance, group captives, risk pooling, finite risk etc., with internal financing options i.e deductibles, losses and deductible sharing within the groups etc.
6. On at least an annual basis is a formal market review of conventional insurance done. Does this review include:

*    Market capacity ?

*    Terms, conditions, and flexibility of coverage ?

*    Cost ?

7. Are the results of this, review formally reported to the Operational Risk Management Committee and the Board of Directors ?

8. On at least an annual basis is a formal review of the insurance program conducted to evaluate the performance of both Underwriters and Brokers ? If yes, does this review include:

* Financial stability ?

*   Claims payment record ?

*   Responsiveness to the institution’s coverage needs ?

*    Premium structure and pricing ?

*   Quality of program administration ?

*    Professional competence and value added ?

*   Fee for service/negotiated commission ?

*   Performance parameters established by written

agreement ?

*    Arunual review of performance against contractual obligations?

*   Quarterly progress reports / review sessions ?

*    Claims handling records ?

*   Quality of program administration ?

  • 9.    Does bank maintain a direct relationship with its Underwriters (both primary insurers and reinsurers) ?

  • 10.    On at least an annual basis does the bank review its exposure to catastrophic risk (i.e "long tail risks" which exceed existing risk financing measures and cause significant impact to the balance sheet and / or share price ) ?
  1. Are these findings reviewed by both senior management and the Board of Directors ?
  1. Are appropriate measures. taken to secure protection for catastrophic losses ? Do these measures include:

*   Use of highly qualified and specific indemnities (i.e customer

contractual, governmental, etc) ?

* Use of global insurance markets to secure specific catastrophe coverage in excess of primary limits ?

*   Plan for post-funding potential losses in excess of

purchased protection ?

*   Pre-loss reserving and finite insurance programs ?