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Buyer, be prepared

Over the last decade, private company Management Liability policies (Directors’ & Officers’ Liability, Employment Practices Liability, Fiduciary Liability) have been very competitively priced with generally loose underwriting guidelines. But, as a famous Greek philosopher once said, “Nothing endures but change” – and we are currently in the midst of a pendulum swing towards stricter underwriting.

Management Liability underwriters with leading insurers, including Arch and Chubb, have confirmed that complete applications, with all requested supplemental information, have become the new norm. In addition to encountering more rigid underwriting, most companies are also likely to be subject to some combination of: higher retentions, higher premiums, and/or reduced coverage/capacity.

There are steps that companies can, and should, take to minimize surprises and maximize results:

  1. Start early – at least 60 days ahead of renewal.
  2. Complete the application and provide all of the attachments noted below.
  3. Discuss the answers to the questions noted below with your broker. These are all situations which could significantly impact an underwriting assessment of your company’s D&O related liability.
  4. If you have any event which may give rise to a Claim (either now or in the future), discuss it with your broker to determine how it should be addressed.
D & O EPL Fiduciary K, R & E Crime Employed Lawyers’
Renewal Application

  • Any acquisitions or divestitures in prior 12 months or possible in coming 12 months?
  • Has there been any funding activity in prior 12 months or possible in coming 12 months?
Most recent annual audited financials

  • Is there any debt? If yes, status of compliance with any debt covenants.
Most recent interim financials

  • Does the company have less than 12 months of cash to operate at current levels?
Capitalization table
Current list of Board of Director members

  • Has there been any significant change in Officers over the prior 12 months or possible in coming 12 months?
Most recent 5500s for all retirement plans


About the Author

Michael Sullivan is a Client Service Manager in the Property & Casualty group and member of the High Tech team at William Gallagher Associates.  His responsibilities include negotiating renewal insurance programs with a variety of clients in the Technology, Energy and Clean Technology industries.

617.646.0228 MSullivan@wgains.com Connect with Michael on LinkedIn

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