2. Have Employees or Volunteers who travel abroad?
3. Have Employees or Volunteers permanently working abroad?
4. Sponsor trips, tours or educational programs overseas?
5. Export products or sell via the internet overseas?
6. Have foreign licensees to distribute product?
7. Have international operations or offices?
8. Provide professional services outside the U.S.?
9. Work on U.S. Military bases overseas?
If you answer yes to any of these, you are uninsured if you don’t have specific coverage for Kidnap and Ransom. This applies whether you are a Manufacturer, Retailer, School, Church or some other organization. It applies even if you have policies written in the other country . If you customer answer yes, we have several markets that offer comprehensive policies at very reasonable prices that can cover everything from Foreign General Liability to Kidnap and Ransom.
The Need for Private Company Directors and Officers Liability
Many private company clients probably think they don't need Directors and Officers Insurance. Their objections may even sound fairly reasonable; they are small or they don't have the same exposure as a public company. The fact is private companies face litigation from many different fronts including: shareholders, competitors, customers, suppliers, vendors, banks and other creditors, as well as governmental and regulatory agencies.
4 Things Your Private Company Should Consider
Even though private companies likely do not trade in a public offering, they do have investors who expect to make money on their investment. If those shareholders lose money, they could seek recourse.
Private company directors and officers are usually a lot more involved when it comes to the day-to-day business than their public counterparts, so their decisions are more likely to be called into question.
Private company directors and officers often have a significant amount of their personal wealth tied to the company and D&O insurance can protect the personal assets of the director or officer, his or her spouse's personal assets and the assets of their estate.
Investigations by government and regulatory agencies can generate enormous defense costs – even if no wrongdoing is found. And when wrongdoing is found, settlement values are often severe.
Directors and officers liability coverage (D&O) is a critical component of the overall insurance protection package that no non-profit organization should forgo. Although a non-profit organization doesn’t have shareholders, the directors and officers still answer to stakeholders, including members, employees and the public. Immunity statutes will only go so far in protecting their personal assets from liability claims.
“Often non-profits assume there are laws protecting them from personal financial catastrophe. Typically they learn the hard way.” Elda Martocci, Travelers nonprofit D&O product manager, quoted in Rough Notes feature article on nonprofit sector.
Only 12% of 900 nonprofits surveyed by the Nonprofit Finance Fund, a charity that provides loans and other financial services to nonprofits, expect to end 2012 with a surplus, compared to 40% who ended their most recent fiscal year with surplus funds on hand.
Almost one third said they did not have funds to cover one month's expenses.
Another third said they only had funds to cover anticpated expenses for the next three months.
More than half reported they have difficulties communicating financial difficulty to their board and donors.
Demands for services are escalating during the recession due to need for job search services, housing and food assistance and related services while donor contributions are drying up.
What is the cost of a claim for wrongful board action?
The average cost of defending a claim is $150,000 in litigation expense.
85% of all non profits have a total annual budget less than $150,000.
The most expensive claims are for failure to adhere to the mission, misappropration of funds, serving personal interests first, and failure to supervise.
Related to claims are claims for Employment Practices Liability including wrongful termination, harassment, discrimination and retaliation.
Directors and Officer can be held corporately and PERSONALLY liable for claims against the nonprofit. Without proper risk management an officer stands to lose assets.
For more information or a full risk management discussion, please or email us.
Reduce you financial exposure in contract litigation
Ask any lawyer. A level of fear and uncertainty always exists regarding the outcome of litigation. In fact, the Bureau of Justice Statistics has found that 33 percent of plaintiffs and 66 percent of defendants lose their contract disputes at trial. No matter which side you are on or how strong a case you may have, it is never clear who the judge or jury will determine is the “winner".
This uncertainty is heightened in contract disputes where a “loser pays" provision requires the losing party to repay the winning party’s attorney fees. This “loser pays” risk is widespread in contract litigation. Research shows that more than 50 percent of all contracts contain “loser pays” provisions. Many states even have made "loser pays” the law regardless of whether a “loser pays” provision exists in a contract. Importantly, courts are required to enforce loser pays provisions, and the fee awards can be greater than the actual damages in a case.
Standard insurance policies specifically exclude coverage for the risk of paying an opponent’s attorney fees in lawsuits involving contract disputes. However, what if you could purchase additional insurance that would protect against this financial risk? No longer would you, as the plaintiff or defendant, be pressed to settle a lawsuit because of a lingering threat of losing and the requirement of paying costly attorney fees to the winning party. Such game-changing coverage would give you the certainty needed to proceed with a lawsuit without the fear of dire financial consequences resulting from loser pays exposure.
Introducing Contract Litigation Insurance.
Underwritten by a global, A+- rated carrier, Contract Litigation Insurance protects plaintiffs and defendants from the risk of having to pay their adversary’s (or opponents) attorney fees in contract disputes. What makes Contract Litigation Insurance unique is that businesses or individuals are not required to purchase the coverage until a lawsuit is filed or served. In other words, you can purchase insurance coverage when it is actually needed - - after litigation begins and you are exposed to the threat of paying your opponent’s attorney fees.
Since Contract Litigation Insurance removes a significant financial threat in litigation, the protection it offers allows you to make better decisions in a lawsuit. A Contract Litigation insurance policy can increase negotiating power, reduce your opponent’s advantage, and improve a potential settlement.
We want to ensure you and your business is properly protected. Enclosed is an informational piece regarding Contract Litigation Insurance. If you are currently or become involved in a lawsuit over a breach of contract, contact us immediately. You can save on the cost of coverage by purchasing a policy as early as possible in litigation and have certainty in what are often uncertain times.
Rise in cyber attacks requires increased D&O diligence
It doesn’t take much sleuthing to know that cybercrime is on the rise. Companies around the world are being besieged by would-be cyber criminals of all types, from both inside and outside the organization.
Yet directors and officers often do not give as much attention to cyber security as they do to other corporate risks. Experts say that this failure to recognize the potential impact of a cyber attack not only exposes the company to financial losses resulting from the incident itself, but can also expose the company and individual directors and officers to management liability claims not covered under standard cyber insurance policies.
”Corporate directors need to be as focused on their company’s cyber security as they are on any other significant issue facing the company,” said Bill Kelly, vice president of commercial D&O insurance at The Hartford. “By not properly overseeing cyber security, directors and officers could be subjecting the company and themselves to risk.” . Corporate directors and officers have a general legal duty to act carefully and with loyalty on behalf of the corporation, explained Kelly. The “duty of care” requires directors and officers to perform their duties in good faith while exercising the level of diligence and care that a prudent person would use under similar circumstances. The “duty of loyalty” requires that directors and officers place the corporation’s best interests ahead of their own. This often includes proper implementation and oversight of the corporation’s system of controls.
“Both of these duties include doing what is required to be informed on important corporate matters and to take appropriate actions when necessary,” said Kelly.
Kelly noted that as companies have become increasingly reliant on digital technology in their operations, the potential damages from a cyber attack have risen as well. These damages can take many forms, including lost productivity, loss of data & intellectual property, business interruption and reputational damage.
“Corporate directors need to recognize that cyber security is an important issue, and that failure to exercise their fiduciary duties on such matters can result in D&O allegations separate from a cyber claim,” Kelly said.
SEC issues guidelines for cyber risks
In addition to common law claims, a failure to adequately assess and disclose cyber security issues may result in violations of federal securities law.
In 2011, the Securities & Exchange Commission (SEC) issued guidelines for public companies regarding proper disclosures for cyber attack incidents. More recently, the National Institute of Standards and Technology (NIST) released its preliminary cyber security framework for comment.
Yet even with the SEC guidelines and the proposed NIST framework underscoring the need to make cyber security an area of focus, many directors and officers still don’t realize their obligations related to cyber security.
“A number of companies are still trying to determine the right approach,” said Kelly. In the past, management might have believed it would be better to hide a cyber event, given its potential impact to the company’s reputation. However, with the SEC guidelines, directors and officers are learning that they may have an obligation to disclose a cyber incident.
“Management has an obligation to share timely, accurate data about the company for a reasonable investor,” said Kelly. “If information is material to an investor, it should be disclosed.”
“Even though cyber risks are rising every year, some executives have yet to view them the same way that many D&O underwriters see them,” said Tim Marlin, commercial D&O product director at The Hartford. “While an actual cyber incident is not covered under a D&O policy, directors and officers have a fiduciary responsibility to their organizations, and part of that responsibility involves overseeing cyber risk.”
In other words, it is important for companies and their executives to take a holistic approach to cyber risk in accordance with the SEC’s guidance to best address all the exposures they face.
Fortunately, there are strategies that can help corporate leaders protect their company and themselves from losses due to cyber attacks.
First, directors and officers should ensure that the appropriate policies and procedures are in place to minimize the likelihood and potential impact of a cyber incident. “This requires a full understanding of a company’s cyber risk profile, as well as best practices in the industry and current regulatory guidance on cyber security,” said Marlin.
Second, it is important to have a strong cyber insurance program in place to respond if a cyber incident does occur.
And finally, a robust management liability policy is vital in the event that a management team’s judgment is called into question and results in shareholder litigation.
The discussion of coverage herein is a summary only. It does not include terms, conditions or exclusions of the policies referenced. Please refer to the actual policies for complete details of coverage. In the event of a conflict, only the terms of an actual issued policy will prevail.
CLI insures litigants from the risk of having to pay their adversary’s attorneys’ fees pursuant to a prevailing party provision in a contract or state statute if unsuccessful. Currently underwritten by Zurich, the coverage is entirely new to the U.S. marketplace and the only one of its kind currently available. All businesses or individuals in any industry who are involved in a breach of contract dispute where a prevailing party provision exists in the contract or state statute are eligible.
Many businesses and individuals enter into a contractual agreement for services (“x” for exchange for “y”). Within these contracts, a “prevailing party provision” typically exists. The provision states “should a suit arise out of this contract, the losing party of the suit is required to pay the attorney fees of the winning (or prevailing) party.” Many states have even made the provision law whether or not noted in the contract.
Plaintiffs or defendants may purchase CLI to cover the cost of their adversary’s attorney fees should a summary judgment or trial determine their adversary to be the prevailing party in the lawsuit. Not only does CLI reduce litigants’ financial exposure, it also helps provide more budgeting certainty and increases settlement negotiation power by knowing that their adversary’s attorney fees are covered should the litigant be unsuccessful in the suit.
See the document liabrary below to learn more about CLI and how it can provide coverage to your clients ONCE LITIGATION HAS COMMENCED.
Please review carefully!
Information is not an offer to sell insurance. Insurance coverage cannot be bound or changed via submission of this online form/application, email, voice mail or facsimile. No binder, insurance change, addition, and/or deletion to any insurance policy coverage goes into effect unless and until confirmed directly with a licensed agent. Note any proposal of insurance we may present to you will be based upon the values developed and exposures to loss disclosed to us on this online form/application and/or in communications with us. All coverage is subject to the terms, conditions and exclusions of the actual policy issued. Not all policies or coverage is available in every state.
Please contact our office at 918-346-6973 or 918-660-0090 to discuss specific coverage details and your insurance needs. In order to protect your privacy, p/ease do not send us your confidential personal information by unprotected email. Instead, discuss that personal information with us by phone or send by fax.
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