With most of Europe in turmoil regarding the Euror crisis, if you look towards the London market providing insurance around the world, more often getting paid in Sterling, Euro and Dollars, a careful eye needs to be had on currency exchange rates, particularly when considering financial lines type risks, which tend to be very expensive.
Clearly if a large corporation came to the London market requesting cover in their country for lets say a bank or financial institution, the premiums could be extremely high when considering Professional Indemnity Insurance, Directors & Officers Insurance and covers such as Perspectus Insurance and Bankers Blanket Bonds. Therefore if the client were to pay in Euro, the underwriting criteria may well have to take into account any currency exchange rates, as clearly this could effect the value of the premium asked.
Again with respects to Dollars, Sterling and Euro fluctuations, this is a constant headache for insurers and underwriters to take into account. It may well be that the safest option could be to ask for the premium to be paid in Sterling which means that the onus would be on the client to forward the monies to the provider, insurance broker or MGA.
Strangely enough just recently it was reported on a case where a company operating accross Europe requested their brokers in the London market to obtain a Professional Indemnity Insurance and Directors & Officers Insurance at a premium of €200,000 and having placed the order, the exchange rate of Euro v Sterling dropped.
So I suppose you could argue that you gain on some days and lose on others. The question here is does the average insurance broker or insurer simply keep the currencies they receive in their bank accounts, without moving or exchanging back into Sterling
No comments:
Post a Comment