"SMEs have been unfairly treated"

"SMEs have been unfairly treated" | Insurance Business

"SMEs have been unfairly treated"

With the ongoing significant correction in the directors’ and officers’ insurance market, Professional Risk Underwriting Pty Ltd (ProRisk) general counsel and product head Jaydon Burke-Douglas (pictured) believes “there’s no time like the present” to be rolling out the agency’s management liability offering for small- and medium-sized enterprises.

Launched in August, the new ProRisk policy is available to Australia or New Zealand domiciled companies with turnover and staff count of less than $25 million and under 500 employees, respectively. Speaking to Insurance Business, Burke-Douglas explained why and how the product is unlike any other.     

“ProRisk doesn’t really have the legacy book and the issues with underpricing that the rest of the market has,” noted the insurance leader, who thinks it’s a great time to be introducing a product with no legacy claims book to look back on that influences pricing. In Burke-Douglas’s view, the market didn’t get it right before.

“We think when management liability was first launched by a lot of our peers and competitors, it was priced incorrectly, and the appetite was incorrect as well,” he told Insurance Business, stressing that management liability has always been a product for SMEs and not large corporate entities.

Burke-Douglas went on to describe ProRisk as being “very cognizant” of who the target market is – a quality that, according to him, allows them to stick to an incredibly unique and highly competitive pricing model that is what these smaller businesses are after. 

Read more: ProRisk continues product launch spree

He asserted: “I think SMEs have been unfairly treated by being put into a book of business with some large corporate entities that had some very large claims and who’ve blown out the loss ratios on that book of business significantly.”

As for the coverage itself, Burke-Douglas noted that the policy does not include ‘Belgian whistles’ that SME clients don’t need or don’t value, and that increase both the product cost and loss ratios unnecessarily.

What it does include is comprehensive – meaning spanning internal and external – crime cover. “When you have a look at who commits organisational fraud, the vast majority of frauds are not actually committed by employees,” said the ProRisk executive, who cited recent KPMG data showing that only 26% are of workers’ doing.

In terms of other benefits, Burke-Douglas was proud to highlight that the management liability product they offer features a fixed or flat deductible across multiple areas of coverage, unlike rival propositions that have separate deductibles for each coverage section.

“We’re giving our customers the choice of deductible across all of those coverage sections, down to as low as $500 and up to as high as $20,000,” he said. “And by giving clients choice, what we’re enabling them to do is to choose their own tolerance for risk. They can structure a programme that suits their bespoke needs.”