Whilst most Insurance Brokers have been pushing this barrow for quite a long time now the up-take of businesses taking it has been disappointing.
Two things have helped in recent times, the first being the initiative from Insurers to package D & O cover up into a suite of Liability products including other liability risk classes that in the past had to be taken as ‘stand-alone’ policies.
The second and more recent thing being some high profile court cases where Directors of companies are being sued by unsecured creditors, most notably the recent Mainzeal case involving ex New Zealand Prime Minister Dame Jenny Shipley, which is probably why it gained so much attention.
While a construction business the size of Mainzeal would have had its own standalone Directors & Offices liability policy the ‘Management’ Liability (ML) suite of covers has been specifically set up for SME businesses (Small to Medium size Enterprises).
As well as the D & O protection other covers typically found in an ML policy might include:-
- Crime Protection (criminal actions of employees against the company or their clients)
- Employment Practices Liability (provides indemnity & defence associated with a claim alleging a breach of employment practice laws, a grievance)
- Liability Consequential Loss (coverage for financial loss suffered resulting from interruption to the normal course of business from a liability claim)
- Corporate Liability (reimbursement to the company following the death of an insured director)
- Others might include Tax Audit & Review, Cyber Liability, Kidnap Ransom & extortion.
General, Employers and Statutory Liabilities are always taken as a minimum, on their own they are referred to as ‘Combined’ Liabilities.
In providing this Management Liability option for ‘SME’s the Insurers have been able to drastically reduce the required premiums to cover these exposures.
As a mass type product with lower than usual limits of indemnity (amount they (the insurer) will pay) the underwriting* is much less involved.
Taking an ML policy with maybe six sections to it will often cost much less than taking two individual policies which, for the size of these business, the Insurers would not be nearly so interested in in any case. It is easier for them to offer this packaged policy selling many more numbers of them.
If you are interested in extending your own combined liabilities policy in to a Management Liability packaged policy please contact me for terms.
*Underwriting – the process insurers go through to work out their premium for a risk/exposure.
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