At a glance
- In a competitive market, the wording and nature of coverage can help brokers sell D&O policies
- Post-financial crisis, awareness of the need for D&O cover is high
- Zurich’s D&O cover goes above and beyond most other standard policies
There has arguably never been a better time to persuade clients of the need for directors’ and officers’ (D&O) cover. While the industry has long been advising company bosses of the risks associated with D&O, it was the financial crisis that really put the issue into sharper focus for many.
“Post financial crisis there have been more claims and a heightened awareness of the need to have cover,” said Alex Morgan, Zurich’s Head of Management Liability. “We are seeing increasingly active regulators looking into issues such as anti-competitive conduct and sharp sales practices. We also saw a wave of insolvencies and bankruptcies, which also often lead to claims.”
It means that directors and officers have probably never felt this vulnerable and at risk of losing out personally in the event of a legal issue, and are likely to be more receptive to policies that offer them broad coverage.
Importance of enhancements
The pitch is a strong one, says Alex, but in a highly competitive market it is the wording and nature of the coverage that can offer the competitive edge to brokers. “It is all about what USPs an insurer brings to the table and what else they offer,” he said. “Lots of people are offering products and selling them cheap but if they don’t have the right features and cover they won’t be good enough.”
Clients who have the same policy they had two years ago may find it is no longer fit for purpose offering new opportunities to sell them updated policies, said Alex. “The wording is evolving rapidly in response to changes in the law and to regulators’ policies,” he added. “It’s a chance to put their coverage to the test on risks like employment practices liability.”
Asking the client whether they have crime and employee dishonesty insurance, can also help brokers offer attractive cover. Other features, for example Zurich’s helpline offering risk management and legal advice as well as an online law guide, can also help sell policies.
Add-ons can help sell policies
Add-on cover that is traditionally not covered by standard D&O policies, is another valuable USP that Zurich policies offer, and can include cover for:
- Civil fines and penalties
- Environmental mismanagement
- Pre-claim costs
- Lifetime run-off for retired directors and officers
- Employee compensation
“These add-ons are not the crux of the cover but are valuable enhancements and are an additional way to sell the policy,” said Alex.
We are seeing increasingly active regulators looking into issues such as anti-competitive conduct and sharp sales practices. We also saw a wave of insolvencies and bankruptcies, which also often lead to claims
Alex Morgan, Zurich’s Head of D&O
Fewer exclusions, reduced excesses
The speed and simplicity of providing cover through Zurich is another reason to consider it. Clients need only answer five questions, while the simple and transparent pricing matrix ensures cover can be offered and costed quickly and easily.
Exclusions and excesses are also areas where Zurich policies compete well, says Alex. “It’s important to see what the policy is excluding – for example, we had 18 exclusions and now we have just five – as well as look at the excess structures. Our excess levels have reduced.”