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E-Trade Carefully:
Management Liability

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  • E-Trade Carefully: Management Liability

Factsheet

D&O/Management Risks

    Brokers and underwriters have a vital role to play in the placement of financial lines insurance. Whilst many products and trades lend themselves irreversibly to e-trade, there can often be an awkward fit. In the context of Management Liability, there are some important considerations:

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    1. Automatic Run Off

    The ‘need’ for run off is well documented and the importance cannot be overstated. It is often not until it is too late that the options for run off on e-traded contracts are exposed as limited or non-existent. At that point, no other options exist to get the cover that is generally considered to represent best advice.

    2. Blended Limits

    One of the most common question from directors and officers to their lawyers is:
    “Will there be enough limit left for me?” This happens where the limits for different sections of cover on ML contracts are combined, with cover for the organisation part of the same policy limit that applies to the directors and officers. This applies on-line and off-line but is a feature where underwriting is automated.

    3. Statements of Fact

    These are used to ‘confirm the true position to the insurer’. One statement of fact in common use requires 25 points to be attested by the policyholder and/or broker. ‘Failure to so may mean that the insurance is not valid.’ An offline proposal form has 14 questions.

    4. Referral

    One of the common complaints associated with e-trade is what happens if a referral is triggered. The ability to ask a question or accelerate a response is limited by the off line capability and experience that sits behind the system and the inability to quickly check with an underwriter is cited as a major limitation of on line systems.

    5. Tighter Language

    A rules based approach often leads to a policy wording which fits with assumptions on risk characteristics and will create less generous architecture as a consequence. A computer programme may struggle to ‘know’ something or use judgement or experience and inevitably leads to less flexibility.

    Neil McCarthy

    Written by

    Neil McCarthy

    Insight

    If the crime policy didn’t run off, where did it go?

    The case for run off on a D&O policy is well established. However, an internet search for ‘crime insurance run off’ will deliver slim pickings.

    Insight

    Why ‘Miscellaneous’
    simply isn’t good enough…

    Why ‘approved’ insurers are all looking to write the traditional business from a similar perspective on the same basis, with pricing and service the only real differentiators.

    Language Matters

    Corporate Manslaughter
    and Management Liability

    It is more than 15 years since The Corporate Manslaughter and Corporate Homicide Act 2007 (the “Act”) was introduced on 6 April 2008. The Act was an attempt to make it easier for the authorities to prosecute organisations where a corporate management failing caused a fatality.

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    MPR are Chartered Insurance Underwriting Agents

    MPR Underwriting Limited is a company incorporated in England and Wales. Registered Address: 10th Floor, Chancery Place, 50 Brown Street, Manchester, M2 2JG. Company Number: 10529758. Authorised and regulated by the Financial Conduct Authority.

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