Bonds make up a healthy portion of the risk management marketplace for financial institutions, and for good reason. They’re versatile and the protection they provide is robust, plus they are more cost-effective for certain types of risk protection than a standard insurance policy. If you’re curious which financial institution bond types your business might need, it helps to review the major categories of financial industry bonds.
Fidelity Bonds for Specific Business Niches
Bonds for financial institutions are called fidelity bonds because they provide protection against bad faith actions by employees of the institution. Typically, bonds are taken out to address client damages in the event of employee theft, embezzlement, fraudulent trading practices, or forgery. Which bond you need depends on what your business does:
- Form 25 covers insurance companies and reinsurance firms alike
- Real estate investment trusts, mortgage trusts, loan companies, and small business financing firms need Form 15
- National banks and subsidiaries of foreign banks use Form 24
- Investment companies rely on Form 14, including brokerages, stock exchanges, mutual funds, and others in the investment industry
For more information about the financial institution bond that fits your business, contact an agent about quoting costs. Once they interview you about your business, it’s easier to build a bond package that really works to protect your business by protecting your clients.