Bank holding companies are corporations that control at least one bank. They have one quarter or more shareholder ownership votes in that bank, and are regulated by the Federal Bank Holding Company Act, which prohibits bank holding companies with headquarters in a particular state from owning or controlling banks in a different state. Unlike in other countries, bank holding companies in the United States cannot own an interest in any entities that are not banks, or another kind of financial institution, and they must register with the Federal Reserve System. Because they are tightly regulated and serve a unique purpose in national and state finance and commerce, bank holding companies and their officers and shareowners are subject to a variety of risks. To keep their operations properly protected in case of a lawsuit or claim, they need commercial insurance for bank holding companies, and an independent business insurance agent will guide the administrators of bank holding companies in selecting the appropriate policy.
Smaller bank holding companies can be advantageous when compared to banks themselves because they can take on the debts of their shareowners without paying additional taxes. They can also buy additional banks and other financial institutions, issue shares of stock, and receive loans of funds from other entities without as much regulation as an ordinary bank. On the other hand, if a bank holding company has more than 300 shareholders it must register with the SEC, and will face more comprehensive regulation. Despite that they are subject to these and other regulatory policies, the extensive capabilities of bank holding companies also expose them to greater legal and financial risks. These and other exposures mean that bank holding companies need to have comprehensive commercial insurance coverage in place.
An independent business insurance agent who has worked with banks, loan and trusts, and other financial institutions will with directors and officers of bank holding companies to ensure that they purchase adequate commercial insurance coverage for their organization. She is familiar with regulations and laws governing bank holding companies, and will be able to discuss options for policies available from a number of different insurance companies.
In meeting with directors and officers of a bank holding company who are interested in buying a new business insurance policy, or supplementing their organization’s current coverage, an independent commercial insurance agent will first discuss the available options for insurance coverage that the company may wish to purchase. She will go over the basic commercial general liability (CGL) policy that any business should acquire, and then she will discuss building coverage, business property insurance, and liability coverage. Since a bank holding company is controlled by a board of directors, and will likely have officers too, she will probably recommend that they buy directors’ and officers’ errors and omissions (E&O) insurance coverage as a part of their business insurance policy, and she will also detail the statutory requirements as to workers’ compensation insurance. Further, she may mention crime insurance, inland marine coverage, and other kinds of business insurance, depending on the needs of a particular bank holding company.
By working with an experienced independent insurance agent, bank holding company directors and officers can gain an understanding of the basics of commercial insurance, and the importance of securing the proper coverage for their organization. An independent insurance agent will guide them in choosing a business insurance policy that can keep their assets, officers, and shareholders protected in case a bank holding company experiences an unexpected loss, or claim.
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