Broker Focus: Directors and Officers Insurance

Patrick Bourk from Integro provided us with in-depth detail on why Directors and Officers need their own specific coverage:

 

"What Is Directors and Officers Insurance?"

Patrick Bourk (Integro): "Directors and Officers Liability insurance fundamentally is about protecting your management team from allegations that they've mismanaged the company."

"Who Should Buy Directors and Officers Insurance?"

PB: "Historically Directors and Officers insurance has really been seen as something for publicly traded companies, great big huge companies that need to protect the board of directors. But nowadays it's something that we place for all size and scope of companies: public, private and not-for-profit too. In fact when it comes to not-for-profit companies it's such a competitive market, and to buy a comprehensive D&O insurance policy can save a charitable board of directors hundreds of thousands of dollars should they get involved in a claim."

"What Does Directors and Officers Insurance Cover?"

PB: "Say there are claims against the board to suggest that they've been mismanaging the company. The trigger mechanism can come not only from an actual lawsuit but it can come from that nasty lawyer's letter from some disgruntled stakeholder saying, "I've got a problem, I've suffered a financial loss and am going to hold you to account for it". These policies can trigger not just on the lawsuit but when that pre-lawsuit action begins."

"What Else Is Included With Directors and Officers Insurance?"

PB: "Now it will not only cover your board of directors and the company for claims of mismanagement, typically we'll sell D&O policies that will also have Employment Practices Liability coverage as a component, Fiduciary Liability policies or coverage as a component (protecting from the management of benefit plans or pension plans). It's really quite broad and expansive by now where the coverage is going."

"How Can Brokers Educate Themselves On Directors and Officers Insurance?"

PB: "Insurance brokers are selling a legal document, they're selling a contract. And so there are a lot of legal nuances to it, legal nuances in terms of completing even the application form. I think that is a really important thing to keep in mind. I think that's why a lot of brokers won't dabble, they'll be committed to the space. I think it's a question of experience, again of educating through conferences and whatnot. I hate to say it but living through a claim, claims perspectives can teach a lot in terms of how policies respond and what they do and what they don't do. Those are some of the ways I think brokers can educate themselves."

You can browse our current range of Directors and Officers products here.