Director’s & Officers (D&O) insurance evalulation

Service Description

Objective:

To determine the appropriate coverage amount, premium, and policy details for a Directors & Officers (D&O) insurance for a start-up or scale-up, ensuring that company leadership and board members are protected from personal losses if they are sued as a result of serving the company.

1. Understanding the Need:

• Company Profile:
• Nature of the business
• Size (number of employees, revenue)
• Geographic presence (single/multi-location, international operations)
• Business model and structure (e.g., private vs. public, parent vs. subsidiary)
• Potential Risks:
• Type of industry and associated legal risks
• Past litigations or issues, if any
• The regulatory environment in the industry
• Potential conflicts of interest

2. Determining Coverage Needs:

• Coverage Amount:
• Evaluate the potential financial impact of legal actions against the directors or officers.
• Consider the company’s size, assets, and potential legal fees.
• Policy Features:
• Defense costs: Will it be within the limit of liability or in addition to the limit?
• Policy exclusions: What is not covered?
• Retentions/deductibles: Out-of-pocket amounts before insurance kicks in.
• Claims-made vs. occurrence basis: When a claim is covered based on when it’s made or when the incident occurred.

3. Comparing Providers:

• Reputation & Financial Stability:
• Review ratings from insurance rating agencies.
• Policy Terms:
• Review the terms, conditions, and exclusions of different providers.
• Premium Costs:
• Compare premium amounts and payment plans.
• Claim Handling:
• Understand the insurer’s process for handling claims.
• Check reviews or references on their responsiveness and fairness.

4. Policy Implementation:

• Engage Legal Counsel:
• Review the final policy document with legal counsel to ensure understanding and appropriateness.
• Educate the Leadership Team:
• Ensure that all directors and officers understand the scope, limitations, and processes associated with the D&O insurance.
• Regular Review:
• Schedule periodic reviews (at least annually) to reassess coverage needs as the company grows and evolves.

5. Claims Management:

• Immediate Notification:Inform the insurer immediately upon becoming aware of a potential claim.
• Documentation:Maintain thorough records of any incidents or actions that could lead to a claim.
• Cooperation:Collaborate closely with the insurer during the claim process, providing all necessary information and following their guidance.

Out-of-scope: the actual closing of the insurance is out of scope.