SUMMARY OF THE ITFA INSURANCE COMMITTEE PRESENTATION - by Silja Calac, Chairperson, ITFA Insurance Committee

On 7^th December 2015, the ITFA Insurance Committee gave the first presentation about its activities followed by a panel discussion during which all participants had the possibility to ask questions and share their opinions on how banks and the insurance market could best work together. The venue was kindly sponsored by Liberty Specialty Markets. Below is a short summary of the topics presented and discussed.

Insurance Survey

In order to better understand the profile and expectations of the ITFA membership, the Insurance Committee had carried out a survey. Sean Edwards presented the main responses, which were as follows:

41 ITFA members participated in the survey. Among the respondents, 78% worked for banks and of those over 50% are regulated under the IRBA.

Over 70% of the respondents use insurance.

Those who answered that they do not use insurance gave as main reason for not doing so the fact that insurance cover would not help increasing credit capacity. Respondents indicating other reasons for not using insurance unfortunately did not indicate what exactly those other reasons were.

Institutions using insurance do mitigate their entire product range, mainly for risk mitigation but also in order to get regulatory capital relief and credit support:

But users of insurance also see many areas for improvement:

Most banks use one or more brokers:

And have a positive claims experience:

And last but not least, the survey gave a clear vote in favor of a standard market policy form:

Presentation on Insurance

The survey presentation was followed by a short introduction about the insurance committee, and on how insurance products could best support banks' activities in transaction banking and trade finance.

First Sébastien Heurtuex, Deputy Head Trade & Insurance Syndications at BNP Paribas explained the regulatory challenges banks face when using insurance and how banks can enhance the efficiency of insuring their assets.

David Neckar, Product Development Director Political & Credit Risks at Willis Limited, then gave an introduction to the insurance market and its evolution over the last ten years.

Thereafter Duarte Pedreira, Corporate Manager Trade Credit at AIG and Silja Calac, Senior Surety Underwriter, Swiss Re Corporate Solutions gave some more detailed explanations on Credit Risk Insurance, Surety and PRI.

The slides on these presentations can be found in the member area of the ITFA website and can only be viewed by ITFA members.

Panel Discussion and Q&A

The presentations were followed by a panel discussion moderated by Elizabeth Dexter, Senior Underwriter Global Financial Risks, Liberty Specialty Markets, and questions and comments from the audience. 

Discussions mainly addressed the question in how far it was possible and useful to have a standard market policy. The panel and participants agreed that this would be a major challenge due to the variety of products and the fact that not only insurance companies but also banks use a multitude of wordings, which are often structured very differently. The committee would have to adopt a step-by-step approach starting probably with a sort of checklist. Nevertheless, the appetite for a more uniform wording or approach to documentation which reflects common concerns and issues was overwhelmingly demonstrated and will be considered very closely by the committee. 

Another concern was if there would be sufficient capacity in the insurance market if cooperation between banks and insurance increases significantly. The necessity to improve training for banks was brought up and the ITFA insurance committee was pleased to announce that the first initiatives for next year have been planned. The dates will soon be available on the ITFA website.