Tag Archives: Risk Management

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.

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.

Better Plan for the Road Ahead with a Risk Management Expert

What is risk management?

Risk management is the forecasting and evaluation of financial risks together with the identification of policies and procedures to avoid or minimize their impact.

The role of insurance in risk management

A successful corporation understands risks and takes precautionary measures so that if the unexpected were to occur, it will be addressed with little to no negative impact, and bottom line damages will be mitigated.

It is important for every growing corporation, or one that is developing new operations, to seek the experience of an insurance and risk consultant who can assess the financial exposure of known risks, and discuss risks that might not have been identified.

Buying an insurance policy is not a holistic approach to risk management. There are a number of strategies, within a risk management plan, that can be discussed. This type of partnership will result in identifying, prioritizing and quantifying the risks, then identifying the most efficient use of insurance policies in managing those risks which are insurable.

Consider this guide for dealing with risk from ClearRisk and contact one of our Risk Management experts today.
1. Create a risk register. Brainstorm with your team about what risks you have: Operational, Hazard, Financial and Strategic.
2. Prioritize your risks in a risk map.
3. For each risk, assess what you are already doing about it. Is it enough?
4. If not, what else can you do to manage the risk? What are your options and what will be the cost and effectiveness of each alternative?
5. Implement the chosen risk management solution(s).
6. At least annually go back to the team and assess the list of risks, their priority, the efficacy of the risk management solutions in place.
7. Consider whether these changes will require an adjustment to your risk management plans and make the required changes.
8. Repeat.