Tag Archives: Commercial Insurance

D&O Insurance: Important Protection for Important People

The most common misconception about Directors and Officers (D&O) insurance is that this coverage is only a necessity for large, publicly traded companies. Smaller companies with fewer shareholders may think their exposure to these types of claims may be minimal or nonexistent; however, private companies can face “professional liability” claims from several sources: employees, investors, creditors, customers, competitors, and government agencies just to name a few. The cost alone of defending such claims can sometimes be enough to cripple a business, with settlements and payouts being even more financially devastating.

D&O Insurance Defined:

Directors and Officers insurance is a type of liability insurance (payable to the directors and officers of a company or the organization itself), which covers these individuals/companies for claims made against them while serving as an officer of the company or on the board of directors for any alleged wrongful acts in their capacity as directors or officers.

What are some of the top reasons for private companies to carry D&O insurance?

    • Employment Practices Liability. Claims of workplace discrimination, sexual harassment, and wrongful dismissal can happen regardless of a company’s size or stature. These situations can be even more pronounced in smaller companies with a more hands-on management team.
    • Peace of mind when taking on investors. Those investing in a business expect to eventually see a return on their investment. However, if a business ends up failing and investors lose their money, they will look to recover it by way of legal action against top executives.
    • Personal asset protection. Directors and officers of private companies may have a fair bit of their own money and assets invested into their company, which can subsequently get dragged into defense costs, settlements, and judgements if found liable for any wrongful acts while operating in their duties.
    • Legal expenses. Companies can still get drawn into litigation even if claims of alleged wrongful D&O acts are groundless, and the costs to defend such unfounded claims can add up quickly.
    • It is now more affordable than ever. The market for D&O insurance has grown substantially over the past decade, with most insurance providers offering some form of coverage. Depending on the size of your company, D&O insurance premiums may only represent a small additional cost in proportion to the rest of your insurance coverage.

 

Perhaps most importantly, having a sound D&O insurance program in place offers peace of mind to management, allowing them to better focus their efforts on other important areas such as business growth and smooth operations. Getting a quote is easy – speak to one of our commercial insurance experts today about what options make sense for your business.

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Bodily Injury and Property Damage: A Cyber Perspective

Cyber-related risk is a hot button issue in the insurance community and the business community at large. Having a cyber component to your company’s insurance program is now the status quo, with many insurers offering stand alone cyber policies, or at the very least, endorsements and other add-ons that help in transferring this risk. These coverages protect against first party losses (e.g. system damage, business interruption, etc.) and third party losses (e.g. privacy liability if sensitive information is breached) that arise from cyber-related perils that are typically excluded under traditional property and general liability policies.

However, simply having cyber coverage in place does not mean that all areas of exposure to cyber-related losses have been covered off. While the threat of system cyber attacks are nothing new to businesses that have an online or technological component, companies may often overlook other areas that security personnel may not realize are connected to the internet or internal computing systems, such as heating and cooling systems, generators, certain pressure vessels, and other systems that have underlying controls. It is these types of systems that frequently lack basic security protocols such as user passwords, and have the potential to cause bodily injury (BI) to individuals or property damage (PD) if they are breached or tampered with in a malicious way. Furthermore, a company may be in for a rude awakening if they experience such as loss, only to find out that, depending on their policy’s wording, their cyber policy does not cover these types of losses, which are already excluded under standard property and general liability policies. For example, many property policies contain exclusions for any loss caused by “the use of a computer system as a means of inflicting harm.”Conversely, cyber policies feature broad exclusions for BI and PD. So what can be done to eliminate this gap in coverage?

“Difference in Conditions” (DIC) coverage presents one solution. Although not a typical feature of cyber policies, DIC coverage can be applied to a cyber-related BI or PD loss that (aside from its cyber-related cause) would normally be covered by a traditional property or liability policy, if not for its cyber-related exclusions – in effect, covering any “difference in conditions” between the underlying property/liability policies and the cyber policy. Unfortunately, this is not a typical offering of most cyber policies, so it is always important to review your policy wordings for any exclusions or limitations that may leave your company exposed to an uninsured cyber-related BI or PD claim.

Still trying to make sense of everything? Our experts are here to help! To learn more about cyber insurance and risk management, and to find out what exposures your company may have, speak to one of our advisors today.

 

[1] Marsh, Cyber Gap Insurance, Cyber Risk: Filling the Coverage Gap (2014) at 4, uk.marsh.com/Portals/18/Documents/Cyber%20Gap%20Insurance%20Brochure_Final.pdf

Experts In Your Field

Since our origins in 1954, The Hull Group has positioned itself as a boutique brokerage that focuses on serving the insurance needs of clients in select industries, allowing us to hone our expertise and develop partnerships that continue to be strengthened over time. Although we have successfully served clients from a broad range of industry sectors, our core focus remains on serving the insurance and risk management needs of the following industries:

  • Communications and Media. Considered a pioneer in this space, The Hull Group has served the insurance needs of major industry players across telecommunications, TV broadcasting, film production, entertainment, and marketing. Serving the likes of Canada’s largest provider of cellular voice and data, one of the most prestigious and internationally recognized film festivals, as well as Canada’s largest cable television provider for several years has deepened our roots in these industries.
  • Information Technology. In today’s day and age, this is arguably an industry that ties everything together. Our particular focus stems from the recognition that IT is one of the largest and fastest growing industries, whereby competency in this area is fundamental to understanding business opportunity and risk in general. Keeping pace in such a fast moving space involves experts dedicated to staying abreast of trends and active involvement, such as The Hull Group’s sponsorship of industry organizations like AceTech Ontario, and our partnership with IT cyber security experts Watsec.
  • Professional Services. When most consumers think about insurance, mostly property damage and liability for bodily injury come to mind. However, for service oriented businesses, a primary loss exposure is the failure to perform or a defect in a service provided, resulting in financial injury to a customer. Working with clients across a broad spectrum of services, including one of the Big Four auditors, as well as one of Canada’s largest providers of talent management and staffing solutions, has solidified our position as a brokerage of choice when it comes to professional liability protection.
  • Manufacturing and Large Retail. Many businesses operating in this space are faced with several challenges when it comes to foreign sales, distribution and operations. Having an expert to guide you through the complicated waters of foreign regulations while still keeping your business fully protected is integral to maintaining smooth operations and continued growth. The Hull Group has held longstanding partnerships with industry leaders in food packaging and distribution, electronic product development and manufacturing, as well as numerous other product retail and manufacturing categories.

Taking a specialist (rather than a generalist) approach has not only allowed us to continually hone our expertise and build longstanding industry partnerships, but it has also allowed us to develop specialized insurance programs with a pool of preferred insurers who have supported us in tailoring these programs to the unique needs of clients who operate in our areas of focus.

To find out more about our specialized insurance services, contact one of our experts today.

Getting “TUF” on Cyber Risk with The Hull Group

Cyber crime is quickly becoming the number one threat to business in the 21st century. According to Insurance Journal, a recent survey conducted by The Risk Management Society (RIMS) cites the top three first party cyber exposures as: reputational harm, business interruption, and data breach response/notification costs.

The insurance industry has been quick to respond to these evolving threats by continuously innovating new coverages to help mitigate any financial burden once a cyber loss occurs. However, some damage, such as reputational harm to a business, can be irreparable, as the transfer of risk via insurance can only go so far when it comes to these “intangible” types of losses. Recent high profile examples of catastrophic data breaches, such as Ashley Madison, Home Depot, and Sony Pictures highlight the need to focus on cyber risk management and prevention.

The Hull Group has recently partnered with Watsec Cyber Risk Management to offer a comprehensive and practical cyber risk reduction solution: TUF. TUF is not an IT solution, but rather a senior leadership solution designed to provide clear insight into an organization’s true cyber risk exposure and the effectiveness of its teams’ efforts to reduce this critical business risk. The TUF program has three different options: TUF for Small Business, TUF Standard Plan for Business, and Customized TUF for Higher Risk Clients. All TUF plans include:

  • Access to Watsec’s cyber risk awareness online module
  • Vulnerability Assessment of network connections exposed to the public internet
  • High level network focused security assessment
  • Cyber Resilience Roadmap & Review of critical security policies
  • Secure access to Watsec’s client portal for your reports and results
  • Quarterly consultation with Watsec’s security specialists
  • Quarterly Executive Summary Report (QESR) and review with their executive team

TUF cyber risk reduction plans are designed to complement any cyber risk insurance policy already in place. For more information on “getting TUF” and exclusive discounts offered to Hull Group clients, contact one of our Commercial Risk experts today.

Prepare for the Inevitable Data Breach

Insurance is catching up with modern day business risks and evolving to address current trends. Unfortunately, data breaches have been an issue for some time, but cyber insurance is available and shaping up to be an effective tool to mitigate certain damages.

In response to the rise of smartphones, mobile payments, cloud computing, and widely publicized data breaches over the past few years, parliament recently passed the Digital Privacy Act (DPA) which expands the powers of Canada’s Privacy Commissioner and increases the burden on businesses to notify persons whose personal information has been exposed as a result of a data breach. Once the new mandatory provisions come into effect (likely sometime this summer), what will it mean for your business?

  • Increased burden and privacy breach reporting costs
  • Increased potential for third party and regulatory litigation
  • Increased risk of reputational damage as breaches will be made public
  • Increased need to talk to us about your insurance protection

Cyber Insurance can make a crucial difference in how your business continues to operate and the impact to your revenue and reputation following a data breach.

To learn more about how you can protect yourself and your company against a data breach, contact one of our Corporate Risk representatives today.

To read more about Cyber Risk in the news, click on the following articles below:

From CanadianUnderwriter.ca: Poised for Change

From Insurance Journal.com: Top 3 Reasons Firms are Buying Cyber Insurance

The Broker Advantage

What is an Insurance Broker?

Insurance brokers act as your personal advisor on insurance matters. They work for you, not the insurance company, to make sure your family; your possessions and your business are properly protected. If you have the misfortune of a loss your insurance broker will guide you through the claims process, helping to ensure a swift and fair settlement by your insurance company, to get you back to where you were before disaster struck. (Read more from the Insurance Brokers Association of Canada)

What Sets The Hull Group Apart

Brokers like The Hull Group provide expert, unbiased advice on your individual insurance needs. We focus on the customer’s needs rather than our own. In addition to providing the client with advice, choice and transparency, we have stood true to a core set of values designed to ensure your peace of mind:

Stay Current – The insurance environment is constantly changing with new rules, new risks and new products that require constant surveillance. As these adjustments happen around us, The Hull Group evolves to structure the best protection solutions for our clients. Internally, we foster an environment that supports continual knowledge acquisition and utilization of current technology.

Specialize – We understand that certain industries have their own complexities and risks. As a result, we have developed depth in our expertise to serve clients within specific market sectors including Communications and Media, Information Technology, Manufacturing and Large Retail. Our focus ensures that you receive the best possible counsel to support your financial protection and ambitions.

Customize – The sophisticated needs of both our corporate and personal clientele could never be serviced well through a cookie cutter approach. At The Hull Group, each of our clients will always receive tailored solutions that have been crafted to their unique circumstances.

Our knowledgeable team of insurance professionals can work together to help you with all of your insurance needs. Contact The Hull Group today and let us find the right insurance for you.

Do Your Management or Board Responsibilities Place you at Risk?

What is Directors and Officers Liability Coverage?

Directors and Officers Liability Insurance, often called D&O, is liability insurance payable to the directors and officers of a company, or the organization itself, as reimbursement for losses or advancement of defense costs in the event an insured suffers a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers.

What types of lawsuits might D&O coverage include?

If Directors and Officers fail to act properly, they may be liable, depending upon the circumstances, to shareholder, employees, customers, creditors, competitors, regulators and other third parties.

In Canada, Directors can be held personally liable, jointly and severally, for unpaid employee wages, vacation and pay taxes. The liability is imposed without fault, on a strict liability basis, and can include liability for amounts which become outstanding even after a director resigns.

The principal sources of actions and allegations against Directors and Officers are extremely broad and can include:
• Misrepresentation/Failure to Disclose
• Failure to Remit Statutory Obligations
• Breach of Contract
• Breach of Duty
• Shareholder Disputes
• Regulatory Actions
• Actions by Creditors and Trustees in Bankruptcy
• Employment Practices Claims

Your Peace of Mind is Within Reach

Call The Hull Group today and speak with one of our representatives to learn more about how your management or board responsibilities may place you at risk and how you may benefit from D&O coverage.