Expert Risk Articles

Financial Lines Q&A

Tougher governmental scrutiny and heightened class action activity in previously benign areas is resulting in an extremely volatile landscape for financial institutions and service providers, as Paul Schiavone, the Regional Head of Financial Lines North America, AGCS explains.

AGCS is launching a range of financial lines insurance products in North America. Which risks are covered?

Financial lines insurance entails the following product lines at Allianz: directors and officers (D&O) liability; employment practices liability; pension trustee liability; and crime. Coverage is available for all commercial companies and financial institutions (banks, insurance companies, private equity firms, asset management firms, and hedge funds). Financial lines also includes various errors and omissions products such as lawyers, accountants, insurance agents/agencies, technology, cyber, media, architects and engineers, and miscellaneous parties. North America is a significant growth opportunity for Allianz in the financial lines space and we intend to become a reliable partner for brokers by delivering sustainable, profitable growth. There is a need for a strong global brand like Allianz in this market and being active here gives our teams further credibility worldwide.

What differentiates Allianz’s financial lines product in the North America market?

The international footprint of Allianz, combined with the expert technical capabilities of our experienced team, will allow us to stand out in a crowded and competitive field. These factors, along with unmatched financial strength, quality people, a global brand, innovative culture, and existing customer base in other lines of business, will help us gain a significant foothold in this market. We also see opportunities to make inroads into the market by using international insurance solutions to deliver program capabilities throughout the world. Finally, we see the claims service we provide as being central to our business strategy and as the ultimate delivery on our promise to brokers and their clients. Delivering first-class claims management supported by a solutions-oriented culture is a further differentiation we can add.

Which trends do you see in financial lines that will impact the industry the most in the near future?

There are a number of disturbing trends that will continue to impact the financial lines industry. The enduring and tightening regulatory pressure, both domestically and internationally, continues to change the liability landscape, as governments
further clamp down on bribery, corruption, and market conduct abuses in reaction to past crises. Penalties have grown for offenders and enforcement activity has increased around trading errors and breaches of sanctions, as well. Class actions, once limited to the highly litigious US market, have trended higher in new areas like Europe, Australia and Asia, as increasingly savvy litigators and litigation funders become dominant in the industry. The combination of tightening governmental scrutiny and heightened class action activity in previously benign areas has made for an extremely volatile landscape for financial institutions and other professional financial services providers. As an insurer, Allianz must be sensitive to these trends and quick to capitalize on the opportunities that result.

How does the financial lines offering in North America differ from Allianz’s’ global product?

The product offerings and appetite within financial lines North America are similar to what is offered in other markets but we offer a more varied and diverse product portfolio in the US than elsewhere. There is a full suite of products in both the corporate and middle market space that is tailored for the extensive US distribution chain, which includes global, large national/regional, wholesale, MGA/MGU and program brokers. This allows us the ability to offer our services to a full array of commercial clients, ranging from very large Fortune 200 companies to local or regional small and mid-sized businesses, giving us an edge over most of our competitors.

This article is taken from the next issue of the AGCS magazine Global Risk Dialogue, which is published twice a year. The next issue will be published in November.