Managers of an enterprise are exposed to considerable risks. That exposure extends to the company?s capital and potentially personal assets. Managers can be held personally liable for improper action, even if mistakes were not made by another person on the team.
The policy terms are the most critical components to a public company?s D&O insurance program placement. Maximizing coverage in the event of a claim is rooted in contract certainty and broadest and best-in-class terms and conditions. Experienced D&O practitioners can protect from debilitating coverage gaps and exclusions. It takes an IPO-experienced and detail-oriented brokerage tactician to obtain critical coverage enhancements. Coverage topics such as straddle claims, definition of loss and D&O exclusions can be the difference between maximizing policy proceeds and an outright claim denial.
Public company D&O insurance can be markedly different in structure than private company D&O insurance. Two very common examples include the separation of limits and the addition of dedicated Side A difference in conditions (?DIC?) insurance. There are structural considerations, such as entity investigative coverage, the inclusion of DIC limits within the ?A/B/C? tower and the decision to run-off prior coverage or maintain continuity of a program.
Limits selection can be influenced by various factors, including: expected offering size, market cap, industry risk factors, historical claims activity, merger & acquisition exposure, bankruptcy risk, a company?s risk retention capacity, limits availability relative to budget and board directives.