Travelers Introduces New Financial Institutions Bond for Asset Managers
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Insights
The introduction of a new financial institutions bond targeted at asset managers by The Travelers Companies, Inc. represents a strategic move to address the specific risks and insurance needs within the asset management sector. The coverage against employee theft, third-party criminal activity and social engineering fraud is particularly pertinent, considering the increasing sophistication of financial crimes and cyber threats. By embedding nearly 30 endorsements and expanding the definition of employees and insured entities, Travelers is likely aiming to enhance its competitive edge in the insurance market.
From a financial perspective, this product launch could potentially open up new revenue streams for Travelers, as asset managers may find the tailored coverage more attractive than generic financial institution bonds. The ease of understanding and streamlined claims process could also lead to increased customer satisfaction and retention rates. However, the long-term financial impact will depend on the adoption rate among asset managers and the balance between premium costs and the frequency and severity of claims under this new coverage.
The inclusion of social engineering fraud coverage in Travelers' new bond is a significant development in the context of evolving cyber risks. Social engineering attacks, which manipulate individuals into divulging confidential information or transferring funds, have become a critical threat for financial institutions. By offering protection against such schemes, Travelers is acknowledging the reality that traditional security measures are often insufficient against human-factor vulnerabilities.
This proactive approach not only serves to mitigate potential financial losses for asset managers but also underpins the importance of comprehensive risk management strategies that encompass both technological defenses and employee awareness training. The expanded coverage could encourage asset managers to strengthen their cybersecurity postures, which is crucial given the increasing interconnectivity of financial systems and the potential for systemic risks.
Travelers' decision to simplify and tailor their financial institutions bond for asset managers aligns with broader trends in the insurance industry towards customization and client-centric product offerings. By consolidating endorsements and extending claim reporting deadlines, Travelers is not only simplifying the product but also providing more flexibility to its clients, which could set a new standard for customer service in the industry.
It is essential to monitor how this product will be received by the state regulatory bodies, as approval is pending. The acceptance and regulation of such tailored insurance products could influence industry practices and potentially lead to more innovative insurance solutions designed for niche markets within the financial sector. The success of this product could serve as a case study for the effectiveness of specialized insurance products in meeting the unique needs of different financial service providers.
Simplified base form includes previous endorsements and offers expanded coverage
“We know asset managers play a pivotal role in the financial ecosystem, and this new best-in-class bond is tailored to meet their unique needs,” said Tracey Santor, Assistant Vice President and Financial Institution Bond Product Manager at Travelers. “We’ve taken the original bond, expanded the coverage, and simplified and streamlined the parts that don’t pertain to asset managers. It’s a significant improvement that will make things easier for asset managers, as well as the agents and brokers who work with them to secure appropriate coverage.”
The current bond provides insurance protection to asset firms and professionals for a variety of financial losses, including theft, forgery and specified fraudulent account activity. The new version from Travelers builds nearly 30 endorsements into the standard form and expands the definition of who is an employee, as well as who is an insured, so that it will now include subsidiaries, private funds and special purpose investment vehicles.
The new bond is easier to read and doesn’t require verification for fraudulent instruction coverage. More days are also available to policyholders when they are required to report claim activity: 60 days instead of 30 days to send written notice of a loss after discovery; 90 days instead of 30 days for notice of any legal proceeding involving an insured’s liability for damages; and 90 days instead of 30 days to provide proof of loss after adjudication or settlement.
Pending state approval, the new bond will be available starting Jan. 1, 2024, for new customers and April 1, 2024, for existing customers up for renewal.
About Travelers
The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and generated revenues of approximately
View source version on businesswire.com: https://www.businesswire.com/news/home/20240104289555/en/
Media:
Michael Whitmer, 860-277-2010
mwhitmer@travelers.com
Source: The Travelers Companies, Inc.
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