Willis survey suggsts financial lines insurance will become a hot commodity

A recent Willis Group Holdings survey suggests liability insurance for financial loss will be a hot commodity in the near future.
Willis’ Financial and Executive Risks (FINEX) division surveyed 40 delegates attending Willis’ quarterly Financial Institutions seminar. Sixty-six per cent of these delegates said they expected financial lines insurance would play a more prominent role in their companies’ protection in the future.
The expectation is no doubt fuelled in part by the recent decrease in companies’ share prices on the stock market. Litigation against companies’ directors and officers is one way for company shareholders to bring the officers to account for the losses.  
Interestingly enough, only 22% of respondents are looking for increased limits of indemnity as a result of the changing economic environment. And when asked whether recent litigation was increasing the level of risk for respondents’ companies, “a surprising 73% of attendees felt that recent litigation was not an indicator of future actions,” Willis noted in a press release announcing the survey results.
At the same time, more than half of the companies surveyed said they expected financial lines premium increases at the next renewal. And one-third of respondents believed underwriting capacity would be scarcer in 2009.
Certainly, the current economic environment had the surveyed companies thinking about re-visiting their current insurer. “Only two companies present would not consider changing their insurers at the next renewal, while 32% said they may look to change insurers.” Willis reported.
Commenting on the findings of the survey, Duncan Holmes, executive director of FINEX and co-head of the Willis’ financial institutions team, said: “It is not surprising that in the current climate, the delegates are focused on protecting their firms from the heightened operational risks they face.
“History has shown that in economic downturns, both the incidence of fraud and frequency of liability claims against financial services companies increases.”