Corporate scandals and Ponzi schemes have taken the management liability policy from a line item buried towards the bottom of boardroom agenda and moved it to a main topic of discussion. Company officials appreciate the importance of a D&O policy like never before. However, there are still misconceptions about what underwriters look for when creating a strategy to meet an organization’s needs.
While primary concerns may vary from one company to another, many common elements are addressed.
- Understanding the company profile, from the size and operating areas to the industry. This helps the insurer assess risk as well as the terms, conditions and price likely to be offered.
- A holistic view of the corporate history and structure. Financing activities, share offerings and M&A endeavors often generate claims, so the underwriter will want to understand these actions.
- Understanding the business’s financial situation, including key elements of the income statement and balance sheet. Their goal is to confirm the solvency of the organization to fund operations during the policy period.
Organizations that appropriately prepare for the underwriter with a systematic, business-like approach can expedite the process. Working with a company experienced in providing a management liability policy can identify underwriting concerns and address them to ensure the finished policy meets your needs.