Canadian executives believe General Liability policies provide enough protection from corporate risk – and that is risky thinking, says a recent survey.
The 2013 Private Company Risk Survey, conducted by Pollara, interviewed executives at 302 Canadian for-profit private companies, with average revenues of approximately $32 million across the sample.
It revealed that many companies are failing to purchase tailored insurance solutions for exposures stemming from, for example: allegations of misrepresentation, mismanagement, or negligence in oversight of the company against members of the Board of Directors or officers of the company.
“All companies, no matter their size, should seek the counsel of a trusted advisor with respect to their risk management and risk transfer decisions,” says Michael Densham, assistant vice president of Chubb Specialty insurance. “It’s the only way to ensure the coverage they believe they have truly provides for the exposures and the needs of the company and its executives.”
Those other exposures include negligence in service provision, allegations of wrongful dismissal, discrimination or harassment in the workplace, employee theft of funds, inventory or equipment from a company or client, and breaches of privacy with respect to confidential information and notification to affected individuals.
In fact, the summary of the Canadian survey results highlight a perception at the executive level that General Liability policies provide the necessary protection. The survey summary goes on to outline how this perception may not hold true in all instances. (continued).
Some of the survey findings include:
- 52 per cent of respondents experienced an event with respect to management liability exposures in the last 3 years;
- 33 per cent of interviewees were concerned about litigation from vendors, competitors or a government regulator;
- 42 per cent of respondents that provide services for a fee were concerned about allegations of negligence with respect to providing those services;
- 39 per cent of executives revealed their concern with employee theft of corporate assets; and
- 31 per cent of respondents expressed concerns with a breach of privacy.
“The lack of purchasing dedicated, tailored policies for the exposures noted in the survey is surprising,” says Densham. “The current market environment allows for economic transfer of the costs related to these risks.”
Other key Canadian findings from the survey include:
- D&O costs of up to $250,000 disclosed by respondents with 25 to 100 employees;
- Average total costs within the context of D&O liability, for respondents with 50-99 employees, of $105,000;
- 41 per cent of respondents with EPL events had total costs ranging up to $500,000; the largest amount disclosed for EPL matters was $5 million.
Total costs disclosed related to E&O exposures ranged up to $500,000.