At a glance
- Directors and Officers (D&O) is a core insurance product for businesses of all types and sizes
- A strong Financial Lines offering is important for brokers wanting to differentiate themselves from their competitors
- Zurich’s recently re-launched proposition, which offers multiple covers under a single product, with one wording and one premium, can make selling D&O easier for brokers
Many Directors and Officers don’t realise that a business’s limited liability status doesn’t offer protection against personal assets should a claim be made against them for an alleged wrongful act.
Whatever a business’s structure and size – whether it be a limited company, partnership, SME or global corporate – its Directors and Officers face similar exposures.
Directors and Officers’ insurance (D&O) offers protection against these personal liabilities, and is increasingly recognised as core cover for all business types.
Zurich’s recently re-launched proposition makes it easier for brokers to help their customers manage their risk exposures, by offering a full suite of products under a single policy wording, at a single premium.
Claims from unexpected sources
There is no such thing as a typical D&O claim. Directors and officers face a broad range of exposures, and claims can often arise from unexpected sources.
Although, Doug Hunter, Senior Market Underwriter (Financial Lines) at Zurich, says: “One exposure that will ring true with any organisation is the risk of insolvency. Should a business go into administration, customers and creditors may never receive money they were owed.
“With the organisation wound up, their only recourse is bringing a claim against the Directors and Officers personally. Wrongful conduct may be alleged, for example, if the business was trading while insolvent. This puts their personal wealth at risk, and can lead to costly legal bills in defending the allegations.”
Such a situation is precisely what D&O insurance aims to protect against, by indemnifying Directors and Officers, and in some instances the business itself, for losses incurred when investigating and defending allegations of wrongful conduct.
Regulatory bodies are now carrying out an unprecedented number of investigations into the affairs of Directors and Officers. Investigations, even without the discovery of any wrongdoing, can be costly and risk severe reputational damage for a business and its employees. Zurich’s cover includes not only indemnity for investigation costs, but also allowances for reputational recovery.
Opportunities beyond the core coverage
Most brokers will now be offering D&O advice and guidance on a regular basis to their customers, but some may be yet to explore its associated covers. This presents a real opportunity for brokers to discuss exposures that their competitors may not be addressing.
Covers such as Employment Practices Liability (EPL), Employee Dishonesty (a.k.a. ‘Crime’), and Pension Trustees Liability (PTL) all protect against key exposures that many customers face. For example, any business with employees will have exposures that are covered by Employee Dishonesty and EPL, so it is important to advise customers on these risks and their associated products.
“This is particularly important as, should a customer suffer a loss, and their broker has not advised them on the associated risk, then that broker may be exposed to a potential professional liability claim,” says Doug. “Brokers should always ensure they are making the right enquiries, and recommending the full range of relevant products should they identify exposures,”
One particular opportunity could arise following the recent changes to pension legislation, requiring employers to offer a workplace pension. Those businesses not using the government scheme, but instead taking responsibility for their own plans, may have exposures that require PTL coverage.
Simplified and condensed
Ease of dealing
Zurich’s network of regional offices makes it easy to pick up the phone to a local underwriter to ask any questions.
Additionally, if brokers are looking to set up a profession-specific scheme, or wish to move a book of business, then Zurich has a number of flexible offerings to accommodate this. Find out more here.
Many insurers will have a large number of management liability products, with wordings for each type of cover, and additional wordings for each type of business. This can be confusing for brokers and customers alike.
Zurich recognises this, and has recently re-launched its management liability offering to make it as easy as possible to offer customers the coverage they require.
The new offering condenses Zurich’s management liability products into a handful of market-leading wordings, dependent on the customer’s business type.
Now, brokers are able to offer D&O, Corporate Liability, EPL, Employee Dishonesty and PTL under one policy, at one premium. Customers can benefit from core D&O coverage, with the option of easily adding a full range of complementary covers under the same policy. This allows for the simple cross selling of appropriate products, but with reduced complexity and cost for both brokers and customers.
Doug adds: “We really do believe that offering this range of covers under a single product for a single premium is market-leading and a real opportunity for brokers.”
Brokers are encouraged to speak with their local underwriter to discuss the new offering and obtain a quotation for other customer types.