What brokers need to know about D&O

Mar 2018

Most large multinational corporations have been well aware of the value of comprehensive D&O coverage for some time. Providing adequate protection against the consequences of actual or alleged “wrongful acts” committed by managers when at work is essential, not just from a financial standpoint but a reputational perspective too. However, it’s not just international giants who are eager to buy D&O coverage these days. There is a growing awareness amongst small and medium sized organizations around the impact that a D&O claim could have on their business. For any ambitious broker, this growing space – which already attracts more than $10 billion in written premiums each year – represents a great opportunity to grow their business. “All not-for-profit organizations, privately run companies and public corporations should be encouraged and educated about the importance of D&O coverage,” explains Barb Pattenden, Director of Insurance Operations, South Western Insurance Group. “The coverage is usually called upon after a breach of duties or for employment related incidences that are not covered under the General Liability policy. D&O policies can also provide coverage for incidents such as harassment including sexual and verbal, failure to hire, failure to promote, wrongful dismissals and workplace bullying.” As well as covering governmental issues, such as CCRA (taxes arrears), labour board and employment regulations, D&O coverage also plays an important for organizations who are attempting to attract new board members. In many cases, an organization will be asked to show proof of D&O coverage before a board member will commit to working with the company. “D&O is a personal liability coverage and in the event of mismanagement, wrongful acts a director or officer will be personally responsible for their actions,” Pattenden says. “D&O liability policy extends coverage to the D&Os and their spouses (NFP) therefore not jeopardizing personal assets.” Any broker who want to expand their book of business and build a reputation as problem solver needs to have access to comprehensive D&O insurance products. It’s a space in the market that is experiencing rapid growth and presenting good opportunities for brokers to attract new clients. “Brokers should look to partner with an intermediary who offers industry leading D&O products,” Pattenden says. “Getting that underwriting expertise in this product line will help brokers improve their client offering.”