Insurance Products

Directors and Officers

Directors and officers are at risk of personal liability claims arising out of their position, regardless of whether the company is privately or publicly held. While the company often provides indemnification, it may not be available for either legal or financial reasons. As a result, most public companies and many private firms purchase Directors and Officers Liability Insurance to supplement the indemnity offered by their company.

Nearly thirty insurance companies offer some form of D&O Insurance, and each policy form is unique to the carrier. Given the complex liabilities you face as a director or officer, it can be very difficult to determine which one is best suited to your needs.

We have a nationally known reputation for being one of the most technically savvy brokers in the industry. We have conducted extensive reviews of the various contracts available and have been successful in negotiating numerous modifications to these policies in favor of our clients. To learn more about this coverage, please see the links below or contact us at insurance@nasdaq.com.

For an initial public offering (IPO) of stock

Companies considering their first offering of public stock have to take a number of issues into consideration when purchasing Directors and Officers Insurance. As a director or officer of an IPO track company, you have exposures not covered by traditional D&O policies, such as control person and selling shareholder liability. You may also wish to consider utilizing the D&O contract to fund any indemnity agreement you are being required to sign for your investment bankers. Other considerations include using a prospectus liability policy which may allow you to capitalize a portion of your insurance costs against offering proceeds.

For companies trading on a Public stock exchange

If your company trades either directly on a U.S. exchange or through an ADR, you have a material risk for litigation arising out of the 1933 and 1934 Securities Acts and other related statutes. Despite passage of the Securities Reform Act in 1995, the number of securities lawsuits continues to increase. Plaintiffs' attorneys have broadened their targets to include virtually all industry groups and financial sizes with substantial settlement results. The increased litigation and settlement values have driven up virtually all Directors and Officers Insurance premiums.

With litigation and rates on the rise, it is more critical than ever to ensure you have the right team representing your interests in this area. We have the technical knowledge, market influence and creativity necessary to control your renewal premium costs and ensure a sufficiently broad policy form.

Private Companies

Despite popular belief, the directors and officers of private companies do have an exposure to litigation, especially in the areas of employment practices and potential securities-related litigation. Today's private company D&O policy forms include broad coverage for employment related litigation, including coverage for non-directors or officers. With premiums averaging $6,000-8,000 for a typical policy with $1 million in limits for a high tech or rapid growth company, the employment coverage alone may justify the premium. In addition to this coverage, most policies provide coverage for securities claims arising from mergers, acquisitions, failed IPOs or former founders. Such litigation can be material to a smaller firm, though it is usually less frequent and less severe than for a publicly held company. The lower risk is also reflected in lower premium rates.

To learn more about these coverages, please contact us at insurance@nasdaq.com.

Fiduciary-ERISA Liability Insurance

Fiduciary-ERISA Liability Insurance protects individuals serving as fiduciaries of corporate sponsored retirement and savings plans. ERISA Liability Insurance gives you the most extensive financial protection available for corporate assets and for the personal assets of management and employees who can be held accountable as plan "fiduciaries" in claims alleging breaches of the many fiduciary obligations set forth in the Employee Retirement Income Security Act of 1974.

ERISA Liability insurance covers companies' directors, officers, sponsor organizations plans and employees with fiduciary or administrative responsibility for employee benefit plans. Importantly, it includes individuals who may not think of themselves as having direct discretionary authority but may still be considered fiduciaries and named in claims. Companies can also secure Run-off Liability Insurance to protect corporate and management assets, after a merger or acquisition, against claims alleging breaches of fiduciary duty committed by the "old company" and its directors and officers.

Protects individuals serving as Fiduciaries
Protects corporate assets and personal assets
Covers company directors, officers, sponsor organizations and employees
Available with Run-off Liability Insurance

Errors & Omissions

Any company or organization that provides professional service to others for a fee or other consideration has an exposure to litigation. You may face allegations such as failing to perform the service, performing services that result in errors, or providing inaccurate or incomplete information. The damages claimed are usually of an "intangible" economic nature. Such economic losses are usually not covered by your General Liability or other commercial insurances, which are designed to cover physical loss or bodily injury claims.

Who Needs E&O?

These are just a few examples of the types of activities that generate E&O claims:

Electronic Data Processing
Consulting
Providing Internet Services
Software development and sales
E-commerce
Architects & Engineers
Insurance Brokers
Investment Advisors
Real Estate Brokers
Property Managers

Internet & E-Commerce

Traditional E&O policies do not address many of the exposures inherent in technology or internet companies, such as unauthorized access, denial of service, and loss of use. Other exposures such as advertising injury, personal injury,copyright infringement and trademark infringement, which can arise from the maintenance of even the most basic corporate website, can also create significant liability. Many of the exposures are specifically excluded under other commercial insurance. While the advent of the internet has made these types of exposures common, and a cause for concern for all companies that use the internet, the insurance products available are complicated and must be finely tuned to ensure they address your particular needs.

Commercially available errors and omissions policies can provide broad and affordable coverage. For instance, many E&O insurance carriers provide $1 million policy limit coverage for the majority of the exposures listed above for as low as $3,000. A company's annual revenue and class of business can affect the pricing of these policies. Other factors that have an impact on pricing include network and Web site security, the caliber of contracts with customers/clients, and whether the company's Web site includes intellectual property safeguards.

The internet provides unique opportunities to reach ever-growing numbers of potential clients and customers, and it also presents modern litigators occasion to give their creative impulses free reign. Online systems, databases, chat rooms, bulletin boards, e-mail, and the internet are examples of current exposures for today's businesses. Companies need coverage for libel and slander, invasion of privacy, infliction of emotional distress, and copyright and trademark infringement—not to mention coverage for errors and omissions in the Insured's professional services that are delivered via the web.

Employment Practices

Employment Practices Liability Insurance (EPL) provides wrongful employment act coverage for suits brought primarily by company employees. These wrongful acts can vary broadly, but primarily encompass:

Discrimination
Wrongful Termination
Sexual harassment

A company typically purchases EPL insurance to indemnify itself, its directors and officers and its employees from suits brought by plaintiffs. EPL policies may also cover Third Party claims (primarily customers and clients of the insured) and independent contractors.

Any company with employees is an excellent candidate for EPL insurance. It is a common misconception that if a company is small they are immune from employment suits. In fact, many smaller companies lack the important Human Resources policies and procedures that protect them from damages awarded from wrongful employment practice litigation.

In recent years, privately held companies have been able to purchase Directors and Officers Insurance policy with full entity EPL coverage. By combining two policies in one there is less chance a claim may fall between a gap in coverage. Sharing one limit of liability also helps achieve an economy of scale.

To learn more about our EPL products, contact us at insurance@nasdaq.com.

Mergers and Acquisitions

A growing number of insurance products have emerged in the last several years that fall under the category of Mergers and Acquisitions Insurance ("M&A"). The general purpose of these products is to help facilitate some type of corporate transaction, including mergers, acquisitions, asset sales, private placements, and initial public offerings. M&A products such as Representations and Warranties Insurance, Litigation Buyouts, and Contingent Tax Liability.

Many of the leading D&O markets have formed specialized underwriting teams with M&A backgrounds and financial, legal, and tax experience. As their specialties vary considerably, it is critical to know which carriers will be most interested in a given transaction. The underwriting process is intensive and it is not practical to work with multiple carriers simultaneously.

Representations and Warranties

Representations & Warranties insurance is designed to protect the buyer from breaches of representations and warranties made by a seller in the merger document. The coverage can be purchased by either party, and can be set up to insure some or all of the reps associated with a transaction. Representations and Warranties insurance is most effective when the sellers need liquidity and cannot have the funds tied up in escrow, or when an agreement cannot be reached as to the size of the escrow.

Litigation Buyout

Litigation buyout contracts are used to cap the liability associated with open litigation. They can be used to facilitate mergerand acquisition transactions or to help a financing event by providing prospective investors with some comfort. Each buyout deal is structured uniquely and takes the litigation merits, timeline and damage analysis into consideration. The carrier may take over the litigation entirely, or simply provide excess limits over existing insurance coverage.

Contingent Tax Liability

Corporate transactions such as the spin-off of a subsidiary through an IPO have contingent tax implications. If a third party later acquires that subsidiary, the IRS may decide to undo the tax-free status of the earlier transaction. Accountants are frequently unwilling to give favorable opinions on such deals due to the subjective nature of the regulations. Contingent tax liability insurance can transfer that risk and give the buyer comfort to proceed with a transaction.

Health Care

The health care industry faces constant change and attack from mergers, acquisitions, disenfranchised physicians, disgruntled enrollees, Medicare and Medicaid fraud and abuse, the impact of managed care, and legislative health care reform such as the Balanced Budget Act (BBA) and the Health Insurance Portability and Accountability Act (HIPAA), to name a few.

Our expertise lies in detailed coverage analysis combined with the meticulous and creative use of innovative products from a multitude of insurance carriers. Our customized detailed proposals not only teach but also serve as loss control and educational references for our clients.

We provide sophisticated and effective wholesale brokerage services for the following products:

Directors and Officers Liability Insurance. Protection for Directors and Officers of organizations. The directors and officers are typically held personally responsible for the actions or acts resulting from directing the organization.
Managed Care Errors and Omissions Liability Insurance. Protection for managed care organizations such as PHOs, IPAs, HMOs, MSOs and PBMs. Managed care's evolving impact in the health care industry creates exposures such as vicarious liability, liability from contracting and building a provider network, liability from choosing what medical care to deliver, and ultimate responsibility for the quality, quantity and speed of that care.
Physicians Billing Errors and Omissions. Protection for fraud and abuse in Medicare and Medicaid billings. This protects physicians, hospitals, health systems, provider networks, home health, nursing homes and durable medical equipment suppliers.
Medical Malpractice Liability Insurance. Protection against medical or professional misconduct or an unreasonable lack of skill.
Provider Excess (Stop Loss). A form of reinsurance that provides protection for medical expenses above a certain limit. Any health care organization that assumes risk via a risk bearing agreement with another party would use this mechanism to control costs.
Employment Practices Liability Insurance. Protection for an insured corporation and its directors, officers and employees against covered losses arising out of claims for most employment law violations such as sexual harassment, discrimination, wrongful termination, failure to promote or hire, and retaliation.
Fiduciary Liability Insurance. Protection of fiduciaries who may be personally liable for losses to a benefit plan as a result of a breach of their duties in administering their employer's plans.
Crime Liability Insurance. Protection from employee theft and embezzlement, dishonesty and other crime-related losses such as theft, forgery, robbery, alteration of checks, destruction of property, computer fraud and extortion.

Other Insurance

Fidelity

Fidelity gives companies comprehensive worldwide protection against virtually any employee crime-related loss of corporate assets, including loss of money, securities and other property due to theft, forgery or disappearance. Fidelity Crime policies can also cover criminal losses involving employee benefit plans subject to the Employees Retirement Income Security Act (ERISA), working together with a Fiduciary Policy to provide gap free coverage.

Protects Corporate Assets
Provides Financial Security
Protects Property, Money and Securities

Kidnap and Ransom

Business today works in an international environment that requires thinking about the unthinkable. Kidnap and Ransom insurance can assist high net worth individuals and ordinary employees control risks before, during and after a kidnapping or extortion event. We can assist in designing and implementing a risk program that provides the financial and crisis management resources needed to protect your employees and your company's security. Policies can incorporate other services including intervention in the event of medial emergencies, crisis support in overseas legal detention and other specialized services depending on the needs of your company.