Insurance experts weigh in on US$4m Ecobank heist

In the aftermath of last week’s shocking US$4 million heist at the Ecobank branch in Bulawayo’s city centre, insurance experts have indicated that there are several insurance measures in place to recover the money if it was insured.

The Insurance Council of Zimbabwe, a representative body of insurers and reinsurers in the country, said all possible classes of insurance are available to a bank depending on the risk exposures the insurance company wants to cover.

Some of the insurance policies which are available to a bank include cash in transit, Fidelity Guarantee, Professional Indemnity and Property Insurance: Property insurance covers damage or loss to the physical assets of a financial institution, such as buildings, equipment, and contents, due to events like fire, theft, or natural disasters.

In responses to the Chronicle, ICZ said the duration of these policies varies depending on the specific needs of the bank and the terms of the insurance contract. Most policies are available for annual terms, but shorter or longer durations may be negotiated.

Below is an extract of questions and answers:

Q. In the case of robberies at financial institutions, what procedures do banks have in place to recover the money if it was insured?

A. In the event of a robbery at a financial institution, banks follow the due claims process as specified in their policy wording. Policy wording indicates the steps, the generic steps are as follows,

· Claim notification

· Insurance Claim Filing: The bank files an insurance claim with the insurer, providing details of the incident, the amount of money stolen, and supporting documentation.

· Claim Assessment: The insurance company evaluates the claim to determine the coverage and validity of the loss. The insurer appoints an assessor to conduct investigations to verify the circumstances of the robbery and the amount of money stolen.

· Claim settlement: If the claim is approved, the insurance company reimburses the bank for the insured amount lost in the robbery net excesses.

Q. Who is responsible for paying the insurance premiums in this scenario, the financial institution or the security firm?

A. To bring the contract of insurance in this case, Ecobank pays the premium to the insurance company to be covered in the event of loss.

· An insurance premium is the amount of money that an individual or business pays for an insurance policy. This payment is typically made regularly, such as quarterly, termly, or annually, to an insurance company in exchange for coverage against specified risks.

· The insurance premium amount is determined based on various factors, including the type of insurance coverage, the level of coverage, the insured party’s risk profile, and the insurance company’s underwriting criteria.

· Premium is paid before the policy is in force.

· Security companies take Professional Indemnity insurance to cover themselves against negligence.

Q. What are the available short insurance policies for financial institutions and what is their duration?

A. All possible classes of insurance are available to a bank depending on the risk exposures the insurance company wants to cover. These are some of the insurance policies which are available to a bank:

· Fidelity Guarantee: The insurance provides coverage against losses caused by fraudulent or dishonest acts committed by employees, such as theft, embezzlement, or forgery. The policy covers direct financial losses, including the theft of money or securities, as well as consequential losses, such as damage to your reputation or loss of business.

· Cash in Transit: The policy provides coverage against the theft or looting of cash being transported, which may arise due to robbery, road traffic accidents, or in the event of force majeure.

· Professional Indemnity: Security companies are normally required to have Professional indemnity to cover their services to clients. It covers for cost of compensation and legal fees resulting from negligent services or poor advice that leads to losses or damage to the client.

· Property Insurance: Property insurance covers damage or loss to the physical assets of a financial institution, such as buildings, equipment, and contents, due to events like fire, theft, or natural disasters.

The duration of these policies varies depending on the specific needs of the bank and the terms of the insurance contract. Most policies are available for annual terms, but shorter or longer durations may be negotiated.

Q . If the prescribed security measures were not adhered to by either party, what are the implications?

A. Each policy has terms and conditions. The breach of each term and condition has associated implications for the policyholder or insurance company.

However, at times warranties are put. Warranties in insurance contracts play a critical role in establishing specific conditions that must be met by the insured party to maintain coverage.

Breach of a contract or policy conditions may result in a repudiation of a claim.

Therefore, it is essential for both parties to strictly adhere to the agreed-upon security measures to minimize risks and protect their interests.