Financial Services Insurance
We are hands-on when you need us, working with over 150 financial services clients.
What you need to know about Financial Services insurance?
We work with over 100 regulated financial services businesses, so we understand your insurance needs. We know experience and continuity are incredibly important, particularly when it comes to complex and sensitive insurance matters. Our relationships with specialist insurers mean we can provide competitive solutions, including combined policies covering professional indemnity, directors’ and officers’ liability, cyber and crime in a single package. We also work closely with and are recommended by several Financial Conduct Authority (FCA) compliance advisory businesses. These relationships, that are a holistic part of our claims offering, make us unique. Unlike other brokers, we have a highly experienced compliance advisor in our claims team too and, on complex claims or complaints, we work with compliance and the insurers’ claims team to ensure claims are handled in line with current regulations.
Why the changing regulatory landscape matters
Frequently Asked Questions
We know you’ll have questions about your insurance. If you don’t find the answers you need in our FAQs, call our dedicated team of expert advisers.
Financial Services
Insurance for this sector is usually purchased in a package or portfolio. This means the financial lines insurance form part of a single package with a single insurer. This is particularly common for small and medium-sized financial services companies, asset managers, financial institutions or fund managers.
The most common package combines professional indemnity, crime insurance and directors’ and officers’ insurance. Recently, some insurers have started to offer cyber insurance, and in some cases public and employers’ liability extensions.
We advise you get professional indemnity and directors’ and officers’ insurance as a minimum. In fact, depending on your Financial Conduct Authority (FCA) permissions, professional indemnity might be compulsory.
Depending on whether you handle client funds on your own platform, crime insurance might or might not add value. We can help advise you.
In recent years, we have seen an increase in claims, in part driven by social media and campaigns by some law firms, often referred to as ‘claims farmers’. These campaigns, previously focused on large investment providers, are now targeting companies of any size.
This can be complicated but insurers, and brokers, should be transparent about exclusions.
We will be able to advise but it’s worth knowing that:
- Some insurers will exclude unregulated investment products or offshore investments.
- Whilst not usually relevant to financial services unless you have an independent financial adviser or advisory department, in recent years insurers have been very concerned with advice on defined benefit pension transfers.
- Most policies will exclude claims in the USA and Canada and some insurers will restrict to UK claims only. More obvious exclusions are fraud, unless the fraud relates to an employee acting without consent or knowledge of directors and managers.
- Many insurers will ‘aggregate’ coverage meaning insurers will apply a policy cap to all claims. This can restrict cover significantly. For example, you may purchase £1,000,000 professional indemnity, £1,000,000 crime and £1,000,000 directors’ and officers’ insurance, but the insurers will apply an overarching policy limit of £1,000,000 meaning the total for all such claims will be £1,000,000 throughout the policy period. The result is £1,000,000 professional indemnity insurance can exhaust the cover, leaving directors with no cover. Sometimes, you’ll only be offered aggregated cover but with separate policy limits for each module (professional indemnity, crime and directors’ and officers’ insurance). If this is affordable it’s an approach that should be carefully considered.
It is crucial that you understand your policy excess and how it can be applied in practice because excesses for this sector can be very high, with some starting at £25,000.
It can be complicated too but we can advise you.
Some excesses will apply to “each and every claimant”. This means that if your investment portfolio suffers a sudden crash due to unforeseen external forces and you receive several claims from investors simultaneously, your excess will apply to each claimant. If you have a £25,000 excess and receive five investors complaints, that would result in a total policy excess of £125,000 for the business.
Other policies will state that claims related to the “same originating cause” are deemed to be one claim and one excess – a more favourable approach for financial services
We can cover:
- Firms on any size.
- Regulated and unregulated investment companies.
- Any firm with Financial Conduct Authority permissions, be it consumer advisory permissions or solely professional investor permissions.
- Clients that specialise in unique areas of investment advice, such as carbon credits, emerging markets and high-end real estate.
- Clients that operate in non-regulated areas such as UK property investment agency work.
If you aren’t sure if we can cover you, contact us.
There’s no straightforward answer to this but we’re here to advise.
We insure some funds that have over £100million of assets under management, but only the very largest firm could afford to buy £100million of insurance.
Your Financial Conduct Authority (FCA) requirements might determine how much you need. Depending on your FCA permissions it may be compulsory for you to have a minimum level of cover, particularly if you have exposure to consumers. That minimum for consumer-related business (advisory) is often £1,850,000.
For larger businesses, you need to weigh up the cost of insurance versus the policy limits purchased and you’ll need to consider several factors, such as the assets under management (AUM), fees charges, types of investors, class of investment, previous complaints and claims.
Some policies are determined by a percentage of funds under management, for example, if you have £100million funds under management you might purchase cover for 5% of that, giving you £5million professional indemnity.
Directors’ and officers’ insurance can be more prescriptive if your firm has external officers that support the functioning of the firm, such as professional investors. Professional investors and venture capitalists, may insist that the funds managed have a minimum level of directors’ and officers’ insurance linked to the level of investment. It’s also common for those investors to insist upon key person insurance for the lead fund managers.
Professional indemnity covers you for allegations of mistakes and negligence.
In financial services that is typically anything that is deemed to be a complaint under Financial Conduct Authority rules.
It will help you provide a formal response to any complaints and will also cover any compensation that the Financial Ombudsman Service (FOS), you or your insurers deem payable.
Typical claims include allegations of negligent advice (where applicable) or allegations of poor performance.
elements that can be included in your Financial Services insurance package
Holistic insurance for financial services
Professional indemnity for financial services
Professional indemnity covers you for allegations of negligence, usually anything that is deemed to be a complaint under FCA rules. Professional indemnity helps provide a formal response to complaints and will also cover compensation deemed payable.
Typical claims include allegations of negligent advice (where applicable) or allegations of poor performance.
Directors’ and officers’ insurance for financial services
Directors’ and officers’ insurance provides defence costs and monetary settlements in cases of claims made against company directors and senior managers. Complainants can include shareholders, regulators, or other third party stakeholders.
Directors’ and officers’ insurance usually excludes claims from clients related to advice provided by the business. Instead, this typically falls under the professional indemnity insurance module.
Cyber Insurance for financial services
Crime insurance for financial services
Crime insurance primarily concerns the cash within your business and protects your business against direct losses, including theft from employees.
It can also cover funds transfer fraud, depending on how crime insurance interacts with cyber insurance, particularly in relation to social engineering losses. We’ll help you understand this.
Office insurance for financial services
Office insurance is usually a combined policy, covering your business property in the office, laptops and employers and liability insurance.
It can also be extended to include business interruption which covers the loss of income and/or additional costs while your business is out of action.
