Financial institutions
Whether your objective is to mitigate liability and fraud risks, or to achieve capital relief through credit insurance, we are the right partner for you.
Switzerland’s financial institutions are a cornerstone of the global financial system and are known for their stability, confidentiality and innovation. However, the sector is facing major challenges, particularly in terms of liability and capital relief. Strict regulatory requirements, changing market conditions and increasing cyber threats require robust risk management and comprehensive insurance solutions. Financial institutions must address complex liability issues, including potential legal claims, executive liability and fraud, while ensuring they have sufficient capital reserves to meet regulatory standards and support business growth.
Swiss financial institutions need comprehensive liability insurance to protect against a wide range of risks. Commercial liability insurance, directors & officers (D&O) liability insurance and fraud insurance are important components that protect them against operational, business and financial risks.
Swiss financial institutions also have to deal with the capital requirements of the Basel III framework, which stipulates higher capital reserves in order to increase financial stability and reduce systemic risks. This is where credit insurance becomes an important instrument. By insuring receivables, credit insurance helps financial institutions to lower their risk-weighted assets (RWA) and thus reduce the amount of capital that must be held in reserve. This process, which is based on the latest Basel III criteria, enables banks to optimise their capital allocation, improve liquidity and increase profitability. Credit insurance therefore not only reduces credit risk, but also provides significant capital relief, enabling institutions to comply with regulatory standards while supporting their growth targets.
Essential policies for financial institutions
Credit insurance
Credit insurance is an essential for financial institutions in facilitating various types of receivables financing such as factoring, securitisation and forfaiting.
In addition, credit insurance offers considerable capital relief within the framework of the Basel III regulations. By transferring the risk associated with receivables to an insurer, financial institutions can reduce their risk-weighted assets (RWA). This reduction in RWA reduces the required capital reserves and frees up funds to increase liquidity and invest in growth opportunities.
Fraud insurance
Due to the nature of their business, financial institutions are a favourite target for internal and external fraud.
Fraud insurance is critical as it covers losses from various fraudulent activities, including embezzlement, cyber fraud and identity theft.
This policy not only covers direct financial losses, but also helps to mitigate damage to the institution’s reputation and ensure that customer trust is preserved and regulatory compliance is met.
Commercial liability insurance
is tailored to cover a wide range of operational risks to which financial institutions are exposed. These risks include data breaches, mishandling of customer data and procedural errors that can lead to significant financial claims.
D&O liability
In the highly regulated environment of financial institutions, executives often make high-stakes decisions that can lead to legal scrutiny.
This insurance protects them from the loss of personal assets, and therefore helps attract high calibre executives.
Our services for financial institutions
Risk assessment and strategy
We start by assessing your unique risk profile and regulatory requirements. Our team works closely with you to develop a comprehensive strategy that meets your specific needs in the areas of credit insurance, commercial liability, D&O liability and fraud protection.
This customised approach ensures that all potential risks are effectively mitigated and aligned with your short, medium and long-term business objectives.
Negotiations & placement
Once the strategy is defined, we conduct a tender and leverage our industry expertise to negotiate optimal terms with multiple insurers.
Our aim is to find the best cover for your needs, be it credit insurance to facilitate receivables financing or comprehensive liability insurance.
Monitoring & optimisation
As the financial landscape changes, so do the needs of your institution. We continuously monitor your insurance programmes and regularly review and optimise them to ensure they remain efficient and cost-effective.
This proactive approach allows us to adapt insurance cover to market changes, emerging risks and regulatory updates, ensuring continuous alignment with your strategic objectives.
Case study: Capital relief through XoL credit insurance for B2B car leasing transactions
Background
A leading multinational bank sought to optimise its capital requirements for its B2B car leasing business. Despite the low inherent risk as the vehicles themselves serve as collateral, the bank wanted to further reduce the capital held against these assets.
Challenge
The Basel III framework required the bank to hold significant capital reserves for its leasing portfolio, which impacted its overall financial flexibility and profitability.
Solution
An excess of loss (XoL) credit insurance solution with a high discretionary limit. This innovative approach enabled the bank to transfer a significant portion of the credit risk to a top-rated insurer, ensuring compliance with Basel III criteria.
The XoL policy was structured to meet specific regulatory standards, including being direct, explicit, irrevocable and unconditional. This alignment ensured that the policy qualified as a credit risk mitigation (CRM) instrument under Basel III.
Results
- Capital reduction: The bank was able to reduce the capital requirements for its B2B car leasing business by 90%.
- Increased profitability: The freed-up capital was reinvested in growth initiatives, significantly increasing the bank’s profitability.
- Regulatory compliance: The bank remained fully compliant with Basel III regulations while optimising its capital structure.
The implementation of XoL credit insurance provided the bank with significant capital relief and demonstrates the effectiveness of innovative insurance solutions in improving financial performance and regulatory compliance.
Why should you choose Raxell?
Whether you are a family office or a multinational bank, when you choose Raxell, you are partnering with an expert who understands and addresses the unique challenges of financial institutions. We offer tailored solutions, and our extensive industry knowledge ensures that your risk management strategies, including liability coverage and capital relief through credit insurance, are precisely aligned with regulatory requirements and your business objectives.
