Mortgage-linked insurance cover for banks

Are you looking for tailor-made insurance covers for your company's intangible assets and business interruption risks? Read here an example of how a bank with a substantial mortgage business differentiated its home-loans product by offering optional disaster relief insurance.

Background: The mortgage business in Japan is highly competitive. A large bank with substantial mortgage business wanted to differentiate its product and enhance client loyalty by offering optional disaster relief insurance with home loans.

Risk-transfer solution: An insurer designed a unique disaster relief product whereby a bank client with a mortgage can get loan repayment relief in the event of damage to their property due to a natural catastrophe event. Depending on the severity of damage, the loan repayment relief (principal plus interest) can extend for up to 24 months. The bank covers the insurance costs by charging a slightly higher interest rate on its mortgage offerings.

Benefits: This product offers disaster relief to both the bank and the mortgage borrower, and covers earthquake risk, which most private home insurance policies exclude. The borrower enjoys a relief period in case of a disaster, thus increasing financial resilience and helping the borrower recover from the loss while also keeping the property. The bank, meanwhile, can offer a more compelling mortgage product, differentiate itself in the market and strengthen existing relations with borrowers without taking on additional risks.

In our newest sigma 05/17 "Commercial Insurance: innovating to expand the scope of insurability" you can read more examples of innovative insurance solutions we have developed to protect our clients from earnings and cash flow risks.

Your risks are unique. Sometimes you need an innovative solution, not a conventional risk transfer product. At Swiss Re Corporate Solutions, we understand that the traditional market doesn't always meet your needs. That's why we use our risk capital to create smart, creative solutions to the most challenging risks around.

Learn more about our Innovative Risk Solutions.