Why Financial Institutions Need Insurance

Why Financial Institutions Need Insurance

insurance for financial institutions

Having insurance to protect various aspects of one’s life is not a new concept, especially when it comes to caring for finances. Oftentimes, the consequences of not having it are far too financially risky, even for the average person. However, when in charge of safeguarding a business that deals specifically with money transactions, insurance for financial institutions becomes an even more crucial investment that protects against multiple vulnerabilities.

What Type of Businesses Count as Financial Institutions?

Any type of business that oversees the managing of deposits, loans and investments falls under this category. Some examples include:

  • Retailers
  • Finance companies
  • Asset management firms
  • Stock brokers
  • Credit unions or building societies
  • Commercial banks

Threats to Financial Institutions

Financial institutions must be prepared to handle classic threats. While many have taken increasing precautions over the years to prevent these types of incidences, the following threats continue to exist in some capacity:

  • Theft
  • Wire fraud
  • Extortion
  • Crime
  • Employee dishonesty

In addition, with growing technology comes a new breed of challenges that make insurance for financial institutions that much more necessary.

  • Phishing schemes
  • Skimming
  • Computer viruses
  • Hacks into the system
  • Interruption in service connection

While it may seem there may be many threats to constantly safeguard against, it is possible to be proactive about it. Choosing specialized insurance for financial institutions can provide the necessary protections to ensure that all bases are covered.