MPR offers a financial lines package policy to protect the assets of partnerships against the risks associated with their operational environment.
Protection of the assets of both the partnership and the partners, along with other organisations and managers within the structure of the business is vital within an increasingly challenging operating environment. The Management Risks Insurance package policy is an integrated solution and provides four important sections of cover, each with its own limit. This delivers a quick and easy to place solution for partnerships.
Why do your clients need Management Risks Insurance?
- Partners, members, directors, officers and senior managers can be exposed to a broad spectrum of risks. Specialist lawyers do not come cheap and 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.
- Although a partnership has no separate legal personality, it is well established that it can sue and be sued in the name of the firm.
- Keeping pace with change, accelerated by technology, can be challenging and difficult. Insurance can provide valuable support during this journey.
- 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:
- Partners, members, directors and officers insurance;
- Employment practices insurance;
- Partnership 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?
- Newly established partnerships may need more focus to get a better understanding of the dynamics and risk profile.
- The policy contains exclusions to remove disputes that are not in the scope of this type of insurance. These include professional liability, disputes over partnership agreements and non-appointment of partners.
- Whatever the risk, underwriters will always try to find solutions, even if the policy terms may be more cautious and reflective of the risk characteristics.
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 insurance for partnerships has never been as widely available as it has been for incorporated organisations. This policy delivers a strong solution across a range of exposures that partnerships face.
- Important cover for the partnership itself.
- The cover provided by this section can provide valuable protection in many areas and defence costs for a number of scenarios, including 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 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. It is a far from perfect science, but it can provide some comfort where it is required.
What can go wrong?
The operational environment continues to pose existing and new challenges for partnerships.
Partnerships are subject to many of the new and existing laws, which make no distinction between incorporated and unincorporated organisations. The development of themes such as regulatory intervention put partnership assets at risk on a daily basis.
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.