MPR offers a financial lines package policy to private companies to protect them against the escalating risks and costs facing these organisations:
Protection of the assets of both the company and its managers is vital within an increasingly challenging operating environment. The financial and reputational risks facing private companies and their managers are growing in complexity and scale. The Management Risks Insurance package policy is an integrated solution for private companies and provides four important sections of cover, each with its own limit. This policy provides a quick and easy to place solution for private companies.
Why do your clients need Management Risks Insurance?
- Directors, officers and senior managers can be exposed to a broad spectrum of civil, criminal and regulatory actions, often involving hefty costs. Specialist lawyers do not come cheap. Depending on the nature of the allegations, hourly rates can be many hundreds of pounds.
- Good human resources practices can go a long way to mitigate exposures to claims by employees but cannot eliminate them completely.
- Keeping pace with change, accelerated by technology, exceeding customer expectations and growing a business profitably demand comprehensive risk management strategies. Insurance for the organisation itself is a key element of this.
- According to the 2024 FraudTrack Survey from BDO, the value of reported UK fraud increased to £2.3bn in 2023, more than double the £1.1bn recorded in 2022 and the second largest annual fraud value recorded by BDO in 20 years. The true level of fraud is likely to be significantly higher, BDO has warned, as some organisations choose not to report the frauds they suffer (fewer than one in seven fraud offences are reported to the police).
What does the policy cover?
A comprehensive package policy providing cover for:
- Directors and officers insurance;
- Employment practices insurance;
- Company insurance;
- Employee Crime, Crime using Computers and Social Engineering Crime.
What limits are available?
Your clients can choose the limits they need for each area of exposure as each section has a separate limit.
What does an underwriter like to see?
- Consistent and experienced management;
- Comprehensive and robust risk management strategies;
- UK based organisations;
- Organisations with strong checks and controls in place.
Is there anything an underwriter wouldn’t insure?
- Challenges exist on those trades characterised by higher hazard risk profiles and poorer historic experience than the average – financial institutions, Independent Financial Advisers and waste recycling companies are examples of this;
- Overseas activity will introduce additional challenges, considerations and questions from an underwriter.
Why choose MPR?
- Deep experience over many years in all the products we underwrite.
- Simple and clearly stated policy language with the removal of ambiguity.
- A straightforward, broker focussed, technical and service based proposition.
- Strong financial rating.
Features
- Comprehensive and constantly improving cover
- Management liability policy sophistication has developed significantly in recent years and has strengthened the appeal to the buyer and their position in the event of a claim or investigation. The result is policy language which is clear and which evolves to accommodate the changing landscape and exposures faced by companies and their directors.
- Important cover for the company itself
- The origin of the cover for the company as an extension to the D&O contract was founded on a simple principle, which was that most private companies were owner managed. Therefore, a loss that was suffered by the company was a parallel loss to the directors by virtue of their ownership interest.
It is important to understand that the cover provided for the company by the insurance market is not as comprehensive as that provided to the directors by the D&O section of the policy. Some risks are simply operational or trading risks and not fortuitous, a key aspect of insurability. Nonetheless, the cover provided by this section can provide valuable protection in many areas and defence costs for a number of scenarios and for some regulatory actions.
- An additional limit of liability specifically for defence costs, in addition to many sophisticated policy features.
- An additional limit specifically reserved for defence costs for directors and officers (defence costs are covered as part of the standard limit, but such limit includes all other loss). The policy is a high quality, well-crafted solution and includes enhancements in areas such as mitigation costs and pre-investigation expenses.
- Previous policy cover option
- Changing management liability insurer is a lot easier than it used to be. Whilst there has never been any obvious impediment to switching to a stronger product offering, bewildering use of jargon and statements of product capability can nonetheless create some room for doubt. Allowing an optional ‘look back’ provision in a policy permits a previous policy to be used to interpret a claim made on a superseding form.
What can go wrong?
Rising regulatory risks remain one of the biggest challenges facing many businesses.
Regulators come in various forms and sizes, depending on their scope and remit. According to The National Audit Office, there are more than 90 regulatory bodies in the UK with total expenditure close to £5 billion a year. Regulator risks are consistently raised as amongst the greatest concerns of directors of UK businesses with the number of claims based on regulatory prosecutions having risen sharply in recent years.
Employment practice claims are on the increase and can be time consuming and expensive.
Typically, defending a straightforward Employment Tribunal claim can cost anything between £8,000 and £12,000. For a more complex claim, say one that includes discrimination, these costs can quite easily rise above £20,000. Although fair and reasonable employers which have proper procedures in place will face more limited exposure to tribunal claims, employment practices liability cover helps for unexpected claims that may be brought.
The potential impact of employee dishonesty can be damaging, and the risk is rising.
The 2024 BDO FraudTrack Survey reported the value of UK fraud at £2.3 billion, which represents the second largest annual fraud value recorded since BDO started the survey in 2003 and a 104% increase on the previous year. Perpetrators developed new opportunities and reacted to a number of socio-economic and geopolitical factors (cost-of-living crisis, global supply chain issues, etc.). Rising energy bills, inflation and global supply chain cost increases elevated the financial pressure on large numbers of individuals and businesses and may have provided extra incentive for perpetrators to rationalise committing frauds.
