D&O coverage is highly beneficial but only when its worth is understood. There are many reasons why D&O insurance is not as it is perceived to be. Are you able to thoroughly explain the true notions to your clients? Since we live in such a litigious society, the importance of D&O protection cannot be stressed enough as it offers a wide range of safety. Since most people do not view it as a necessity, explain its value to your clients and discuss their risk exposures with them.
Common Misconception to Debunk
Common misconceptions and what to highlight about D&O insurance.
D&O is only for large private businesses
Every director or officer is exposed to claims as they can come from just about anywhere.
D&O coverage is not necessary
Many directors assume they are covered by their limited status, but the liability is attached to the role.
It’s too expensive
Adding D&O is much more affordable than it is perceived to be and will be cheaper than alternatives.
It’s too complex
All too often, people are wary of what they don’t understand and miss out on the potential benefits. Lay out the benefits and exposures your clients have to set the tone so they may be more willing to listen. D&O has become simplified throughout the years and companies will only be asked for minimal financial information. Being able to quote your clients now does not take the amount of information that it once did in the past.
It’s not a real risk
A common assumption is that the company will pay defense costs of incidents involving directors. In many cases the company is unable or unwilling to cover these expenses. Nowadays, you have a duty to speak to your clients about D&O insurance to avoid exposing your own professional indemnity policy to claims as well.
Selling D&O Insurance
Do you fully understand professional liability exposure yourself? It could be helpful to conduct risk identification reviews for D&O clients. This should be ahead of schedule, such as 60 days prior to their renewal. This is the time to review everything your client does and assess what they may be doing that presents an exposure that’s not covered. E&O is likely to arise naturally.
Focus on what’s not covered and help clients reveal exposures rather than just rushing to cover up other ones. Avoid getting too deep in technicalities when explaining D&O coverage. Do your best to make it relatable for your clients while speaking on the basics about how they can benefit from the coverage. That starts with doing your own homework about each of your client’s unique risk exposures so you can prove to them that you have their best interest in mind and are knowledgeable about the industry. Focus on the financial health of your clients, as that will depict the types of quotes they will review from the market. Help manage client expectations by preparing them for any financial scrutiny that may come from carriers and be proactive in providing financial information with what they will be needing to submit to streamline the process. It is best to always be transparent with your clients and keep the longer-term relationship in mind.
About IPRO Agency Insurance Services
IPRO Agency Insurance Services is a specialty insurance brokerage with the expertise to protect your firm, assets and to help you retain clients. Our services offer all types of professionals the protection they need so they can stay committed to their work with ease. We are connected with leading insurers to bring you the best coverage for your unique needs and areas of risk. Get in touch with us at 888- 673-8039 so we can begin to safeguard your success.