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Premium increases and tightened capacity expected with COVID-19 uncertainty beyond Q4

BPL Insurance Market: Q4 2020 Update

Financial, Executive and Professional Risks (FINEX)

By Alison MacLaren | February 3, 2021

BPL insurance market highlights; including a focus on cost, markets, targeted segments, capacity, coverage, and COVID-19 impact.
Cost and retentions
  • Rates: BPL premiums continue to trend higher with double-digit increases, particularly with the uncertainty that COVID-19 has had on credit and loan portfolios. On average, premiums are increasing by +15% to +25% for large banks and +10% to +50% for mid-market banks.
  • Excess rates: Excess rates are trending upwards as well and may seek increases higher than primary or underlying.
  • ILFs: Increased limit factors (ILFs) have generally been healthier in BPL than for other lines, but where they are low, excess insurers will seek to right size (+70% or greater).
  • Retentions: Retentions are being re-examined and may be increased to mitigate premium increases.
  • Primary markets continue to push rate increases and excess markets have largely aligned behind those key primary markets on pricing and terms. Excess markets are adjusting ILFs upwards.
  • U.K. and Bermuda markets will consider BPL if retentions and pricing make sense. U.K. insurers generally need supporting crime business.
  • Newer markets include Markel (community banks), Old Republic (excess), Ascot (excess/wholesale). Great American acquired ABA Insurance Services and is now writing community bank business.
  • Breaking relationships with long-term primary and/or excess insurance partners may be required to mitigate premium increases. That said, markets are reluctant to take on new business for an unfamiliar risk. There is very limited appetite for standalone BPL.
Targeted segments
  • Insurer appetite: BPL continues to be challenged from a claims frequency and severity perspective and capacity remains restricted. Insurers will look for supporting business on D&O in order to write BPL. Carriers are cautious of perceived volatility for banks heading into 2021 as COVID-19 fallout remains a risk.
  • Less appetite for large banks with >$100B in assets.
  • Stable to narrowing coverage: Broad coverage is generally still available, though some insurers are reassessing their portfolio and adjusting the scope of coverage. Some may be less willing to expand the scope of lending liability, regulatory and investigations coverages and narrow exclusions. Notable coverage developments include:
    • Cyber extensions: Some insurers for smaller to mid-market banks are offering limited cyber extensions to their policies, though such cover is not as broad as stand-alone cyber coverage; if provided, it is important to coordinate with existing stand-alone cyber programs, particularly as mid-market banks expand digital capabilities.
    • Silent cyber risk exclusions: Some insurers are adding cyber exclusions to BPL. As insurers continue to assess their silent cyber exposures, we may potentially see similar exclusions added to other types of policies.
  • Tightening Capacity: Insurers with $15M in capacity are increasingly looking to cut back to $10M or ventilate capacity. Insurers are closely managing aggregation across all lines.
  • BPL: Capacity continues to be limited. Primary BPL markets are becoming more conservative with some pulling back in writing banks with >$10B in assets. Some excess BPL markets have pulled back from new business in light of COVID-related risks.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

Title File Type File Size
Banking market update – Q4 2020 PDF 3.1 MB

Banking Industry Leader, Willis Towers Watson

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