Chubb Insurance Pulls Back From Insuring Banks

I have heard now from two sources that Chubb Insurance is pulling back from providing community banks with management liability, directors and officers, financial institution bond, and related insurance coverages.

The reports are that the insurer is not canceling policies but pricing renewals so to be uncompetitive. Also, no new banks are being quoted by Chubb. The word I have is that they want to reduce their bank writings by ninety percent.

I have reached out to several contacts at Chubb but have not received a reply. I also have attempted to contact leaders at Chubb but have not been successful.

If you work for Chubb and these reports are not correct please contact me ASAP. I will print your version here. The last thing I want to do is spread false information. Right now, this looks real.

Please note that this change by Chubb does not seem to affect property insurance, auto, general liability, and other standard lines of bank insurance coverage.

If you currently are insured by Chubb talk with your agent and get direct information about your account. Again, I’m not aware that policies are being canceled. If you have a policy, you are probably set until expiration. I have to assume that Chubb will not increase coverage for any current policy. Again, check with your agent.

Chubb is the first insurer to make a move like this in over fifteen years in the bank insurance market. Chubb did pull out of the Credit Union market several years ago – this feels different. The CU business has one huge insurer (90%+ market share). Chubb got tired of beating their head against the CUNA wall.

Cincinnati Insurance pulled back from banks over $500m several years ago too. I saw that as a strategic move where the insurer recognized a strength they had for smaller banks, not a comment on the health of the bank insurance market. Again, this feels different.

We have been in a “Buyers Market” in the bank insurance world for some time.  Several insurers entered the market over the past ten years. The extra competition has forced prices to stay level and coverages to be (largely) expansive.

Is this the first sign of a “Sellers Market” where prices go up?  I don’t think so. It will be interesting to see what happens when the banks currently with Chubb go into the marketplace for renewals?  Will other insurers use this as a chance to start increasing prices?  We will see.

Action Items For Current Chubb-Insured Banks – Renewal In the Next 6 Months:

  • Talk with your insurance agent. Share this post.
  • Have your agent talk with Chubb – get the story from their side.
  • Start the renewal process now. Be proactive and aggressive.
  • Consider other insurers who are likely to provide proposals for your coverage – there are several good options for most banks.
  • Is this the time to bring in other agents? (Are you unhappy with your current agent?)
  • Don’t panic. If your bank has no (or few) claims and have no regulatory issues you will undoubtedly be able to get proposals from two or three insurers. You may find better coverage at a better price than what you have been paying.

Action Items For Current Chubb-Insured Banks – Renewal More Than 6 Months Away:

  • Talk with your insurance agent. Share this post.
  • Have your agent talk with Chubb – get the story from their side.
  • Start the renewal process five months before policy expiration.
  • Don’t panic. The insurance market for banks is robust and competitive (for strong banks).

Have questions?  Want help with the renewal process? Interested in an unbiased opinion of your bank’s insurance coverage?  Have a nagging insurance issue that needs a fresh approach?  Let’s talk.  Call 207-284-0085 or email Scott@ScottSimmonds.com.