Why is My D&O Renewal Going Up?

Market tolerance for Director’s and Officer’s Liability Insurance (D&O) is in flux.  Both public and private organizations carrying D&O insurance should be prepared for potential changes in both coverage and premium.

According to this article from the Insurance Journal (Director’s & Officer’s Renewal ) carriers will be taking a long hard look at your organization’s financial performance in determining premium and coverages offered.  Be prepared for underwriters to ask more questions in quantity and expect those questions to be more detailed in regards to financial structure, performance, and future.  Additionally underwriters will be making more document requests and possibly requiring client meetings.

Your Premiums Are Going Up!

If your company has large amounts of debt or struggles to pay debt on time, your premiums are going up. Plain and simple.  You can bet on it like Death and Taxes (and the Bills not making the playoffs)…

Other factors that will be scrutinized in coming D&O renewals include:

• Claims History
• Declining Revenue
• Relationship with Bank
• Industry Impact of Market Downturn
• Layoffs
• Employer Stock in Retirement Plan

These are just a few (see the Insurance Journal article above for more).

So What Do You Do?

Be prepared! Let me say that again, BE PREPARED! Don’t meet with your insurance professional two weeks before your renewal and expect everything to be business as usual.

• Contact your insurance professional two months before renewal (He or she should be contacting you, but that is a different article),
• Have documentation surrounding issues ready,
• Have a detailed plan for addressing issues including explanations and solutions,
• Build a relationship with the underwriter which will help them feel comfortable with your business.

Director’s and Officer’s Liability is a very serious coverage because it protects the individuals responsible for guiding an organization.  Most D&O claims arise from situations Board members were unaware of.  Inadequate protection can be crippling.

Disclaimer:

This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions take or not taken by the readers based upon such information.

Thank you,

Ryan H.

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