Why do clients need Financial Institutions cover?
- Your clients work in a highly regulated world so they would want to have the appropriate insurance in place to help protect their operations
- Beyond protecting the Board and Directors, clients may want to help protect the business from mistakes made by staff, internal and external fraud
- It's not just about their building - your client's coverage may need to go beyond physical assets, to include protections like Crime, Professional Indemnity, Cyber and Business Interruption
Why choose Aviva's Financial Institutions cover?
With clients that range from global banks and local building societies to asset managers and investment funds, our underwriters have extensive experience across a range of industries and locations, enabling them to provide cover designed to help meet regulatory needs and protect against industry-specific risks.
We take a flexible, client‑focused approach, working closely with brokers and insureds to understand individual risk profiles and offer cover for exposures faced through our suite of Financial Institutions products.
Our dedicated team of experts are here to provide you with cover that's right for the needs of your business, and with both Company and Lloyd's expertise, we have a range of solutions available.
What cover is available?
We offer a full suite of Financial Institutions (FI) products which can be offered across three core areas on a standalone or combined basis, and tailored to the clients' specific industry requirements.
- FI Directors & Officers (D&O) - responds to both traditional and emerging exposures facing directors and officers. It helps to protect against claims made against them in their insured capacity.
- FI Professional Indemnity (PI) - responds where a financial institution faces claims arising from negligence, errors or omissions connected to the professional services it provides.
- FI Crime - helps protect against financial loss arising from dishonest or fraudulent acts for both internal and external crime scenarios, including social engineering fraud.
- Fund Directors’ & Officers’ Liability (Fund D&O) - specific cover for an investment fund to help protect directors and officers from claims made against them in their insured capacity, reimburses the fund when it has indemnified an insured person and can include cover for securities-related exposures, if purchased.
- Investment Management Insurance (IMI) - a dedicated product specifically for Investment Managers. It combines management liability, professional indemnity, and crime protection into one product, helping to protect investment managers against unique risks, including AIFM exposures.
Did you know?
Policyholders can also access a range of legal help and advice through our Aviva Businesslaw website, powered by Farillio. Your clients can get access to business and legal guides, along with help for everything from branding to tax planning.
Get a quote
You can get a quote for Financial Institutions by contacting your usual underwriter or calling us on 0207 764 6034.*
Claims
Your client will be allocated a claims handler, who will support them throughout the entire process, but they’ll also have access to our panel of solicitors working in litigation and claims investigation.
Our defence excellence team will be on hand to help protect your clients against fraudulent claims and also give advice on best practice procedures and legislation that can help companies enhance their risk management strategies.
Claims stories
These are illustrative examples of the types of claims our Financial Institutions team might work with.
Trading Error (PI)
An investment manager operates a discretionary investment portfolio, with defined mandate restrictions. One of the restrictions is a concentration threshold on certain stocks. A senior employee executes a trade to reduce their exposure to a volatile stock that has become close to the concentration threshold restriction and reallocate to a lower risk, ETF fund. The employee, in error, purchases £1m of additional stock instead of selling £1m of the existing stock. This results in a breach in the mandate restrictions and leaves the company with a higher level of volatile stock than intended. They escalate internally to their compliance and risk team and notified their PI insurer of the error.
Response
With insurer consent they implemented several actions:
- Gradual sell-down of the stock to avoid a significant market impact
- Entered a small, short-term hedge position to limit the downside
- Engaged with clients impacted by the mandate breach to offer compensation in order to avoid litigation
Cost of the loss
- c.£100,000 trading loss incurred during stock sell-down
- c.£100,000 in compensation to clients impacted due to the mandate breach
- c.£50,000 in legal and PR costs in client communications
The outcome
If corrective action was not taken swiftly to mitigate the loss, the company would have been facing a trading loss of £1m, litigation defence costs of £250k and client damages for £500k. The mitigation cover under the PI policy contained the losses, reduced the risk of further litigation and minimised the reputation damage suffered.
Activist Investor Action (D&O)
Company A, a UK-listed investment trust, experiences sustained underperformance against benchmarks. As investor dissatisfaction grows, Company B begins acquiring shares to build a significant stake with the intention of influencing control of the board. Company B alleges that the board of Company A has failed in its fiduciary duties, citing poor investment decisions and mismanagement as the cause of the trust’s performance.
Response
Company A notifies its D&O insurer. Legal advisers are appointed to defend the board against allegations brought by Company B, including claims of breach of fiduciary duty and mismanagement.
Cost of loss
- c.£300,000 in legal defence costs
- c.£200,000 in specialist advisory and litigation costs
The outcome
The court finds that the board has not breached its fiduciary duties. While no damages are awarded, significant defence costs are incurred and covered by the D&O policy.
Employee Theft (Crime)
A senior employee at a building society creates a fictitious account and begins transferring small amounts from customer accounts to avoid detection. After multiple customer complaints relating to unrecognised transactions, the pattern is identified and investigated.
Response
An internal investigation is launched, followed by notification to law enforcement and the insurer. Forensic analysis confirms that the employee has been systematically diverting funds over an extended period.
Cost of loss
- c.£200,000 in stolen customer funds
- c.£50,000 in investigation and forensic costs
The outcome
The employee is identified and dismissed, and the incident is reported to the authorities. The insurer reimburses the financial loss and associated investigation costs under the Crime policy.
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