Directors' & Officers' Insurance – What Buyers Need to Know

Directors' & Officers' Insurance – What Buyers Need to Know

How do you feel about your insurance broker? If you’re dealing with Directors' & Officers' (D&O) insurance, your response may be mixed. A range of issues in the past few years, including COVID-19, have brought the importance of brokers and insurance partners to the forefront. Here are some insights from our professional and executive risk experts into the state of D&O insurance in Canada.

 
What’s going on in the D&O market today?

Recent years have seen a dramatic increase in claims, and as result policies are no longer as expansive as they were 3-5 years ago. Exclusions have increased and coverage has been further restricted by the narrowing of policy language. Another factor is the Canadian insurance industry has come out of a decade of mergers between brokerages, which limits the options for professional liability insurance.


How did we get here?   

COVID-19 created  mounting losses across insurers’  global D&O portfolios, which caused insurers to  re-evaluate their underwriting appetite. Entire portfolios faced extensive underwriting scrutiny, which translated into many insurers making big changes. Here are a few of the things we’ve seen insurers do:

• Completely depart the D&O sector
• Withdraw or reduce capacity from specific loss-prone industry classes
• Narrow the breadth of policy coverage 
• Increase pricing and retentions

What does that mean for people who need D&O coverage?

They have reduced access to coverage, as well as limitations on how customized that coverage can be for their risk management needs. As insurance companies increasingly focus on their balance sheets, the desire to adapt coverage to a client’s needs is overshadowed by the ease of selling a prepared set of options in a one size fits most approach.
 
This increased risk of inadequate or misaligned coverage leaves directors and board members open to personal financial loss despite their companies paying insurance premiums. It can also create confusion around what policies do and don’t cover, as there may be sector exclusions that directly impact business operations.


How do we combat these forces for our clients?

Through listening and learning the story of our clients, we can then strategize and obtain custom coverage. Our team is composed of insurance experts with deep knowledge of D&O coverage. We also have well-established connections with insurance companies and are able to tell those client stories directly to the underwriters drafting the policies.
 
Successful D&O insurance is rooted in compassion for and understanding of your business—from your current operations to your future growth plans. We take the time at EQUA to learn about these goals and then strategize custom coverage that safeguards you current and future board members so you can focus on managing your business while we mitigate your risks.

Are you ready to talk about D&O coverage for your team? 
Email us at findoutmore@equaspecialty.com today.