INVESTMENT MANAGEMENT INSURANCE CASE STUDY
Investment Business, Financial Institutions PI Remarketed at Two Consecutive Renewals
Financial institutions PI is a narrow market. Testing it every year is how you know a $20,000 premium is the market price. Year one the incumbent held; year two a new market beat the renewal offer and the cover moved.
THE SITUATION
An investment business holding financial institutions professional indemnity asked Tank Insurance to manage its renewals. The cover carried a $2 million limit each claim and in the aggregate with a $25,000 deductible, and the business wanted the market tested rather than the renewal notice accepted.
OUR APPROACH
- Year one: the incumbent specialist market quoted approximately $21,900. A second specialist market quoted around $23,900 and a third confirmed it could not beat the renewal. The cover stayed with the incumbent.
- Year two: the incumbent's renewal came to around $22,000 once GST and stamp duty were added to a $19,000 base. Two further markets referred the risk. A new specialist market offered terms at a gross premium of approximately $20,400 for the same $2 million limit, and the cover moved.
- Subjectivities were managed before binding, including an application form dated within 30 days, confirmation that all work is for private companies domiciled in Australia and New Zealand, and a review of the insured's standard contract.
THE CHALLENGES
Financial institutions PI has few markets and each of them prices on the business's own declarations, so the saving in any one year is modest. The point is the discipline: testing the market each year is the only way to know whether the renewal offer is the market price.
THE OUTCOME
Year one, the cover renewed with the incumbent at approximately $21,900. Year two, the cover was placed with CFC at approximately $20,400 gross, around $1,600 below the incumbent's renewal offer, with the same $2 million limit.
Final Solution: Financial institutions PI held at the market price two years running, with a move to a new market in year two saving around $1,600 on a like-for-like limit.
This case records one historical outcome; current insurer appetite, premium, timing and terms depend on the complete risk at the time of application.
For the wider buying context, see our investment management insurance guide.
INVESTMENT BUSINESS QUESTIONS
What this placement answers for other investment and financial businesses
What is financial institutions professional indemnity?
Is it worth remarketing PI every year for a financial business?
What does an insurer need before binding a PI renewal?
INVESTMENT MANAGEMENT INSURANCE
Put this placement in context
Case-study results are historical and are not a promise of current pricing, capacity or policy terms. This page is general information only and does not take account of your objectives, financial situation or needs.
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