Although the worst of the financial crisis appears to have passed, abundant caution remains as insurers in every major line of business evaluate their book of financial institution (FI) risks. There were some favorable developments for FI companies as buyers of insurance in 2009, notably a softening casualty insurance market and a relatively stable property insurance market for non-CAT risks. The specter of problem loans and defaulting commercial and individual mortgages, however, remain problematic for many FI insureds. Looking to 2010, it is likely that underwriters will continue to practice robust due diligence.

Looking Ahead

Financial institutions likely will continue to confront capacity and pricing challenges in financial and professional insurance lines for the foreseeable future. For those FI companies with an improved risk profile, it is likely that the financial and professional lines insurance markets will be stable, with premium rates likely remaining flat, provided no major industry scandals erupt and the economic crisis does not flare up.