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Directors and Officers Insurance

PROTECTING YOUR BUSINESS FROM LIABILITY ISSUES

While business insurance policies by definition provide coverage for the business itself, individual company officers may still be personally exposed to financial losses resulting from a lawsuit. To protect your company’s leadership, you may want to consider purchasing directors and officers (D&O) liability insurance.

What D&O Covers

Directors and officers is a type of liability insurance that covers individuals for claims made against them while serving on a board of directors and/or as an officer. This type of policy can be written to cover directors and officers of for-profit businesses, privately held firms, not-for-profit organizations and educational institutions. There are several elements—called “Sides”—to a D&O policy, including:

  • Side A—Protects a corporation’s directors and officers when the company cannot indemnify the individuals.
  • Side B—Reimburses the organization when it indemnifies the individuals, thus protecting the company’s balance sheet
  • Side C—Also known as “entity coverage,” this eliminates disputes of coverage allocation when both the directors and officers and the insured organization are named as co-defendants in a securities lawsuit.

A wide range of claims against a business have the potential to target company leadership for responsibility—and liability. Business leaders can be held responsible for a company’s failure to comply with regulations and to provide a safe and secure workplace. In addition, if a company is found liable for losses because of operational failures and mismanagement, directors and officers may be exposed to liability as well. The types of claims that may target company leadership individually as well as the company itself typically include:

  • Shareholder suits over company or stock performance.
  • Creditor or investor suits over mismanagement or dereliction of fiduciary duties.
  • Misrepresentation in a prospectus.
  • Decisions exceeding the authority granted to a company officer.
  • Failure to comply with regulations or laws.
  • Employment practices and HR issues.
  • Pollution and other regulatory claims.
  • Cyber liability.

What’s Excluded?

Standard exclusions in a D&O policy typically include:

  • Fraud.
  • Personal profiting.
  • Accounting of profits, and other illegal compensation exclusions.
  • Pending and prior litigation.
  • Prior (late) claim notice.
  • Bodily injury/property damage.
  • Insured versus insured claims.
  • ERISA.

The Added Value of Protecting Company Leaders

Aside from paying for claims against company leadership, there are several other benefits to carrying directors and officers liability insurance, including a company’s ability to:

  • Retain Strong Leaders—Many potential directors and officers will be reluctant to join your business if they are exposed to personal liability. D&O liability insurance helps address this issue.
  • Attract Investment—Venture capital and private equity firms often require companies to have D&O coverage before they make an investment.
  • Cover Legal Fees—Even if directors and officers are exonerated of wrongdoing, your business may incur substantial legal fees in responding to a lawsuit against your leadership. If you have a D&O policy, your company’s legal fees will likely be covered.

There are several types of D&O policies, defined by what liabilities, legal costs and other exposures are covered. You should select coverage based on risks and how your business is organized. Your company’s bylaws or articles of incorporation may provide certain protections—or indemnification—for directors and officers. You should seek guidance from your insurance professional about this somewhat complex, technical type of insurance.

Source: U.S. Department of Transportation, “Director’s and Officers Insurance” http://www.iii.org/ website. Accessed March 1, 2016. http://www.iii.org/article/directors-and-officers-insurance

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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Litigiousness

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ASBESTOS-RELATED ILLNESS

Exposure to asbestos can cause lung cancer and other respiratory diseases. The first asbestos-related lawsuit was filed in 1966. A large number of workers who may have physical signs of exposure but not a debilitating disease are filing claims now out of concern that if they later develop an illness, the company responsible may be bankrupt, due to other asbestos claims. It can take as long as 40 years after exposure for someone to be diagnosed with an asbestos-related illness. In December 2012 A.M. Best increased its estimate of ultimate insurance industry asbestos losses from $75 billion in 2011 to $85 billion. A.M. Best attributes the jump to a spate of court rulings that increased insurance coverage for claimants, and a rise in claims related to mesothelioma, a fatal type of cancer identified with exposure to asbestos. In Congress a bill, Furthering Asbestos Claim Transparency, was introduced in March 2013. The bill would require asbestos trusts, set up by companies to deal with asbestos claims to file detailed quarterly reports on claims and their resolution with the Executive Office of U.S. Trustees. (See Insurance Issues Updates: Asbestos Liability).

Estimated Asbestos Losses, 2006-2015 (1)

($ billions)

Losses
Year Beginning reserve Incurred (2) Paid Ending reserve (3)
2006 $25.2 $1.7 $2.6 $24.1
2007 23.2 2.5 2.5 23.5
2008 23.5 1.1 3.7 20.5
2009 20.6 1.9 2.0 20.4
2010 20.5 2.4 2.3 20.6
2011 20.6 1.8 1.8 20.6
2012 20.4 1.9 2.0 20.3
2013 20.4 2.0 2.1 20.3
2014 20.3 1.5 2.4 19.4
2015 19.4 1.7 2.8 18.3

(1) All amounts are net of reinsurance recoveries.
(2) Incurred losses are losses related to events that have occurred, regardless of whether or not the claims have been paid, net of reinsurance. Includes loss adjustment expenses.
(3) Because of changes in the population of insurers reporting data each year, the beginning reserve may not equal the ending reserve of the prior year.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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INSURERS’ LEGAL DEFENSE COSTS

Lawsuits against businesses affect the cost of insurance and the products and services of the industries sued. Travelers Insurance 2015 Business Risk Index showed that legal liability was the fourth-highest rated worry for business leaders in the United States, down from No. 3 a year earlier. Of 1,210 business leaders surveyed, 56 percent indicated they worry about it somewhat or a great deal.

Businesses address their liability concerns through many types of risk management, of which insurance is an important component. A Swiss Re study indicated that the United States in 2013 had the largest commercial liability insurance market in the world both in premium volume ($84 billion) and as a percentage of Gross Domestic Product (0.50 percent). More than half of all global liability premiums were written in the United States.

Top 10 Largest World Commercial Liability Markets, 2014

(US$ billions)

Direct premiums written Liability as a percentage of
Rank Country Liability Total nonlife GDP (1) Total nonlife GDP (1)
1 United States $86.6 $539.3 $16,805.4 16.1% 0.52%
2 United Kingdom 10.6 101.0 2,713.9 10.5 0.39
3 Germany 8.6 92.9 3,751.9 9.2 0.23
4 France 6.7 83.3 2,812.5 8.1 0.24
5 Japan 6.3 85.5 4,913.0 7.3 0.13
6 Canada 5.0 50.6 1,831.0 9.9 0.27
7 Italy 5.0 46.3 2,133.5 10.8 0.23
8 Australia 4.9 32.7 1,501.0 14.9 0.33
9 China 4.2 105.5 9,603.2 3.9 0.04
10 Spain 2.1 31.2 1,369.5 6.9 0.16
Total, countries shown $140.0 $1,170.0 $47,400.0 12.0% 0.30%
Total, all countries $165.0 $1,600.0 $77,400.0 10.3% 0.21%

(1) Gross domestic product.

Source: Swiss Re.

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Insurers are required to defend their policyholders against lawsuits. The costs of settling a claim are reported on insurers’ financial statements as defense and cost containment expenses incurred. These expenses include defense, litigation and medical cost containment. Expenditures for surveillance, litigation management and fees for appraisers, private investigators, hearing representatives and fraud investigators are included. In addition, attorney legal fees may be incurred owing to a duty to defend, even when coverage does not exist, because attorneys must be hired to issue opinions about coverage. Insurers’ defense costs as a percentage of incurred losses are relatively high in some lines such as products liability and medical malpractice, reflecting the high cost of defending certain types of lawsuits, such as medical injury cases and class actions against pharmaceutical companies. For example, in addition to $1.2 billion in products liability incurred losses in 2014, insurers spent $953 million on settlement expenses, equivalent to 77.4 percent of the losses.

Defense Costs And Cost Containment Expenses As A Percent Of Incurred Losses, 2013-2015 (1)

($000)

2013 2014 2015
Amount As a percent
of incurred losses		 Amount As a percent
of incurred losses		 Amount As a percent
of incurred losses
Product liability $1,166,236 75.1% $952,997 77.4% $1,037,576 70.5%
Medical malpractice 1,656,257 53.3 1,873,835 43.2 1,871,109 53.8
Commercial multiple peril (2) 2,096,543 37.7 2,083,103 39.1 1,977,804 34.7
Other liability 4,914,500 25.4 4,366,030 21.1 4,786,370 19.9
Workers compensation 3,035,186 12.3 3,357,813 12.9 3,305,927 13.7
Commercial auto liability 1,207,682 10.7 1,266,051 10.6 1,541,787 11.4
Private passenger auto liability 4,600,395 6.8 4,714,942 6.5 4,923,908 6.2
All liability lines $18,676,799 14.0% $18,614,771 13.1% $19,444,481 12.8%

(1) Net of reinsurance, excluding state funds.
(2) Liability portion only.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

View Archived Tables

Median And Average Personal Injury Jury Awards By Type Of Liability, 2014

(1) Represents the midpoint jury award. Half of the awards are above the median and half are below.

Source: Reprinted with permission of Thomson Reuters, Current Award Trends in Personal Injury, 55th edition.

View Archived Graphs

PERSONAL INJURY AWARDS

Most lawsuits are settled out of court. Of those that are tried and proceed to verdict, Jury Verdict Research data show that in 2014 (latest data available) the median (or midpoint) award in personal injury cases was $75,000, up from $70,000 in 2013. The average award also rose in 2014 and was $1,055,480 compared with $1,010,069 in 2013. Thomson Reuters notes that average awards can be skewed by a few very high awards and that medians are more representative. In cases of product liability the highest median award was in industrial/construction products cases ($2,541,000). In disputes concerning medical malpractice the highest median award was in childbirth cases ($2,160,420). In cases involving business negligence the highest median award was against manufacturing industries ($743,000).

Awards of $1 million or more accounted for 18 percent of all personal injury awards in 2013 and 2014, up from 17 percent in the prior two-year period. In 2013 and 2014, 76 percent of product liability awards and 51 percent of medical malpractice awards amounted to $1 million or more, the highest proportion of awards. Vehicular liability, and premises and personal negligence liability cases had the lowest proportion of awards of $1 million or more, at 8 percent and 11 percent, respectively.

Trends In Personal Injury Lawsuits, 2008-2014 (1)

Year Award median Probability range (2) Award range Award mean
2008 $40,000 $10,000 – $225,780 $1 – $188,000,000 $836,978
2009 40,000 9,887 – 207,828 1 – 77,418,670 750,392
2010 39,216 10,000 – 200,000 1 – 71,000,000 653,898
2011 60,924 12,249 – 343,958 1 – 58,619,989 782,912
2012 75,000 19,100 – 356,481 1 – 155,237,000 1,097,759
2013 70,000 16,000 – 300,000 1 – 165,972,503 1,010,069
2014 75,000 16,412 – 400,000 1 – 172,061,728 1,055,480
Overall, 2008-2014 $50,000 $11,303 – $268,402 $1 – $188,000,000 $857,730

(1) Excludes punitive damages.
(2) Twenty-five percent above and below the median award. The median represents the midpoint jury award. Half of the awards are above the median and half are below. This helps establish where awards tend to cluster.

Source: Reprinted with permission of Thomson Reuters, Current Award Trends in Personal Injury, 55th edition.

View Archived Tables

AVERAGE PERSONAL INJURY JURY AWARDS, 2009-2013

Source: Reprinted with permission of Thomson Reuters, Current Award Trends in Personal Injury, 54th edition.

View Archived Graphs

CASUALTY COST OF RISK PER $1,000 OF REVENUE, 2006-2007

Source: Marsh Inc.
  • The casualty cost of risk per $1,000 of revenues dropped by 6 percent from $1.88 in 2006 to $1.77 in 2007 for companies surveyed by Marsh in both years. The overall drop was 23 percent in 2007, taking into account new and repeat participants.

DIRECTORS AND OFFICERS LIABILITY INSURANCE

Directors and officers liability insurance (D&O) covers directors and officers of a company for negligent acts or omissions and for misleading statements that result in suits against the company. There are various forms of D&O coverage. Corporate reimbursement coverage indemnifies directors and officers of the organization. Side-A coverage provides D&O coverage for personal liability when directors and officers are not indemnified by the firm. Entity coverage for claims made specifically against the company is also available. D&O policies may be broadened to include coverage for employment practices liability (EPL). EPL coverage may also be purchased as a stand-alone policy.

Sixty-four percent of corporations purchased D&O coverage in 2014 according to the Cost of Risk survey from the Risk and Insurance Management Society, based on a survey of 1,457 corporations. Banks were the most likely to purchase D&O coverage, with 87 percent of industry respondents purchasing the coverage, followed by 85 percent of respondents in telecommunication services. JLT Specialty’s 2015 U.S. Directors and Officers Liability Survey of 157 U.S. organizations that purchase D&O liability insurance found that the group’s average D&O limits that were purchased was $131 million and the median limit purchased was $105 million. For public companies the average limit was $170 million. For private companies the average was $98 million. Twenty-four percent of public companies and 17 percent of private companies increased their D&O limits from their previous purchase. According to the 2014 survey 31 percent of respondents reported having had a claim in the past five years, with nonprofits reporting the highest proportion of claims (58 percent).

Types Of Directors And Officers Liability Claims By Ownership, 2011-2014 (1)

(1) Based on participants in the survey that reported one or more claims over the five-year period.

Source: JLT Specialty 2015 U.S. Directors and Officers Liability Survey.

View Archived Graphs
  • The percentage of respondents reporting derivative shareholder/investor lawsuits, the most widespread claim, dropped from 39 percent in 2013 to 35 percent in 2014.

Directors And Officers Liability Claims By Type Of Claimant In The United States, 2011-2014 (1)

(1) Based on participants in the survey that reported one or more claims over the four-year period.

Source: JLT Specialty 2015 U.S. Directors and Officers Liability Survey.

View Archived Graphs

DIRECTORS AND OFFICERS LIABILITY CLAIMS BY BUSINESS OWNERSHIP, 2002-2011 (1)

(1) Based on participants in the survey that reported one or more claims over the 10-year period.

Source: 2011 Directors and Officers Liability Survey, Towers Watson.

View Archived Graphs

EMPLOYMENT PRACTICES LIABILITY

Employment practices are a frequent source of claims against directors, officers and their organizations. Organizations that purchase insurance for employment practices liability (EPL) claims typically either buy a stand-alone EPL insurance policy or endorse their directors and officers liability (D&O) policy to cover employment practices liability. In 2014, 9 percent of public companies responding to a JLT Specialty survey shared or blended their D&O limits with another coverage such as EPL or fiduciary liability, compared with 44 percent of private companies and 67 percent of nonprofits.

In 2014, 35 percent of the 1,457 respondents to the 2014 Cost of Risk survey from the Risk and Insurance Management Society said they bought EPL policies. Banks were the most likely to purchase EPL coverage, with 59 percent of industry respondents purchasing the coverage, followed by telecommunications services (48 percent), consumer staples (46 percent), and consumer discretionary firms (45 percent). American International Group Inc. was the leading writer, based on EPL premiums written, with a 25.9 percent market share in 2014, followed by Chubb Corp. (11.5 percent), AXIS Capital Holdings Ltd. (10.9 percent), Zurich Insurance Group Ltd. (10.3 percent), and The Travelers Companies Inc. (5.7 percent).

Trends In Employment Practices Liability, 2010-2014

Year Median (midpoint) award Probability range (1)
2010 $172,000 $50,000 – $385,000
2011 271,000 83,811 – 552,500
2012 68,195 11,598 – 256,254
2013 100,000 15,772 – 250,497
2014 87,975 20,000 – 306,108

(1) The middle 50 percent of all awards arranged in ascending order in a sampling, 25 percent above and below the median award.

Source: Reprinted with permission of Thomson Reuters, Employment Practice Liability: Jury Award Trends and Statistics, 2015 edition.

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Employment Practices Liability, By Defendant Type, 2008-2014 (1)

(1) Based on plaintiff and defendant verdicts rendered.

Source: Reprinted with permission of Thomson Reuters, Employment Practice Liability: Jury Award Trends And Statistics, 2015 edition.

View Archived Graphs

SHAREHOLDER LAWSUITS

Cornerstone Research has conducted annual studies of securities class-action lawsuit settlements and filings each year since the passage of the 1995 Private Securities Litigation Reform Act, enacted to curb frivolous shareholder lawsuits.

Post-Reform Act Class-Action Filings Of Securities Lawsuits By Industry, 1997-2015 (1)

Industry Average 1997-2014 2014 2015
Consumer 67 81 77
Communications 29 17 26
Technology 24 14 24
Industrial 17 10 19
Financial 35 26 17
Energy 8 15 11
Basic materials 4 4 9
Utilities 3 1 4
Other 1 2 2
Total 188 170 189

(1) Private Securities Litigation Reform Act of 1995.

Source: Cornerstone Research.

Post-Reform Act Class-Action Settlements Of Securities Lawsuits, 1996-2015 (1)

(2015 dollars)

Settlements 1996-2013 2014 2015
Minimum $0.1 million $0.3 million $0.4 million
Median 8.2 million 6.0 million 6.1 million
Average 55.6 million 17.0 million 37.9 million
Maximum 8.5 billion 265.3 million 970.5 million
Total settlements $80.9 billion $1.1 billion $3.0 billion
Number of settlements 1,457 63 80

(1) Private Securities Litigation Reform Act of 1995; adjusted for inflation by Cornerstone Research.

Source: Cornerstone Research.

View Archived Tables

Source: Insurance Information Institute, “Litigiousness” http://www.iii.org/ website. Accessed January 30, 2017. http://www.iii.org/fact-statistic/litigiousness

© Copyright 2017. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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Small Business Insurance Basics

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Insurers often combine a number of insurance coverages into a package that is sold as a single contract. The most common policy for small businesses is the Businessowners Policy (BOP).

The BOP combines coverage for all major property and liability insurance risks as well as many additional coverages into one package policy suitable for most small businesses. The term “BOP” specifically refers to insurance policy language developed (and revised as needed) by experts at ISO. ISO provides sample insurance policy language, research and a variety of other products to insurance companies.

The BOP includes business income insurance, sometimes called business interruption insurance. This compensates a business owner for income lost following a disaster. Disasters typically disrupt operations and may force a business to vacate its premises. Business income insurance also covers the extra expense that may be incurred if a business must operate out of a temporary location.

To cover specific risks associated with a business, a variety of additional coverages may be added to the basic BOP. For example, if a business has an outdoor sign, the BOP doesn’t cover it unless coverage is specifically added for an additional premium. If a business relies on electronic commerce, the owner can add coverage for lost income and extra expenses in the event the ability of the business to conduct e-commerce is slowed down or stopped due to a computer virus or hacker.

Only small- to medium-sized businesses that meet certain criteria are eligible for a BOP. Factors insurers consider include the size of the premises, the required limits of liability, the type of business and the extent of offsite activity. Premiums for BOP policies are based on those factors plus business location, financial stability, building construction, security features and fire hazards.

Major Coverages

Most small businesses need to purchase at least the following four types of insurance.

1. Property Insurance

Property insurance compensates a business if the property used in the business is lost or damaged as the result of various types of common perils, such as fire or theft. Property insurance covers not just a building or structure but also what insurers refer to as personal property, meaning office furnishings, inventory, raw materials, machinery, computers and other items vital to a business’s operations. Depending on the type of policy, property insurance may include coverage for equipment breakdown, removal of debris after a fire or other destructive event, some types of water damage and other losses.

2. Liability Insurance

Any enterprise can be sued. Customers may claim that the business caused them harm as the result of, for example, a defective product, an error in a service or disregard for another person’s property. Or a claimant may allege that the business created a hazardous environment. Liability insurance pays damages for which the business is found liable, up to the policy limits, as well as attorneys’ fees and other legal defense expenses. It also pays the medical bills of any people injured by, or on the premises of, the business.

3. Business Auto Insurance

A business auto policy provides coverage for autos owned by a business. The insurance pays any costs to third parties resulting from bodily injury or property damage for which the business is legally liable, up to the policy limits.

4. Workers Compensation Insurance

In all states but Texas an employer must have workers compensation insurance when there are more than a certain number of employees, varying from three to five, depending on the state. Workers comp insurance, as this coverage is generally called, pays for medical care and replaces a portion of lost wages for an employee who is injured in the course of employment, regardless of who was at fault for the injury. When a worker dies as a result of injuries sustained while working, the insurance provides compensation to the employee’s family. An extremely small business, such as one operated by one or two people out of a home, may not need workers compensation insurance. But it often needs more property and liability insurance than is provided in a typical homeowners policy.

Other Types of Business Coverages

1. Errors and Omissions Insurance/Professional Liability

Some businesses involve services such as giving advice, making recommendations, designing things, providing physical care or representing the needs of others, which can lead to being sued by customers, clients or patients claiming that the business’s failure to perform a job properly has injured them. Errors and omissions or professional liability insurance covers these situations. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides legal defense costs, even when there has been no wrongdoing.

2. Employment Practices Liability Insurance

Employment practices liability insurance covers (up to the policy limits) damages for which an employer is legally liable such as violating an employee’s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides legal defense costs, which can be substantial even when there has been no wrongdoing.

3. Directors and Officers Liability Insurance

Directors and officers liability insurance protects directors and officers of corporations or not-for-profit organizations if there is a lawsuit claiming they managed the business or organization without proper regard for the rights of others. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides for legal defense costs, even where there has been no wrongdoing.

4. Key Employee Insurance

Life or disability income insurance can compensate a business when certain key employees die or become disabled. These coverages cushion some of the adverse financial impact that results from losing a key employee’s participation.

5. Umbrella Policies

As the name implies, an umbrella liability policy provides coverage over and above a business’s other liability coverages. It is designed to protect against unusually high losses. It provides protection when the policy limits of one of the underlying policies have been used up. For a typical business, the umbrella policy would provide protection beyond the general liability and auto liability policies. If a company has employment practices liability insurance, directors and officers liability, or other types of liability insurance, the umbrella could provide protection beyond those policy limits as well.

 

Source: Insurance Information Institute, “Small Business Insurance Basics” http://www.iii.org/ website. Accessed May 9, 2018. http://www.iii.org/article/small-business-insurance-basics

© Copyright 2018. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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Directors and Officers Insurance

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PROTECTING YOUR BUSINESS FROM LIABILITY ISSUES

While business insurance policies by definition provide coverage for the business itself, individual company officers may still be personally exposed to financial losses resulting from a lawsuit. To protect your company’s leadership, you may want to consider purchasing directors and officers (D&O) liability insurance.

What D&O Covers

Directors and officers is a type of liability insurance that covers individuals for claims made against them while serving on a board of directors and/or as an officer. This type of policy can be written to cover directors and officers of for-profit businesses, privately held firms, not-for-profit organizations and educational institutions. There are several elements—called “Sides”—to a D&O policy, including:

  • Side A—Protects a corporation’s directors and officers when the company cannot indemnify the individuals.
  • Side B—Reimburses the organization when it indemnifies the individuals, thus protecting the company’s balance sheet
  • Side C—Also known as “entity coverage,” this eliminates disputes of coverage allocation when both the directors and officers and the insured organization are named as co-defendants in a securities lawsuit.

A wide range of claims against a business have the potential to target company leadership for responsibility—and liability. Business leaders can be held responsible for a company’s failure to comply with regulations and to provide a safe and secure workplace. In addition, if a company is found liable for losses because of operational failures and mismanagement, directors and officers may be exposed to liability as well. The types of claims that may target company leadership individually as well as the company itself typically include:

  • Shareholder suits over company or stock performance.
  • Creditor or investor suits over mismanagement or dereliction of fiduciary duties.
  • Misrepresentation in a prospectus.
  • Decisions exceeding the authority granted to a company officer.
  • Failure to comply with regulations or laws.
  • Employment practices and HR issues.
  • Pollution and other regulatory claims.
  • Cyber liability.

What’s Excluded?

Standard exclusions in a D&O policy typically include:

  • Fraud.
  • Personal profiting.
  • Accounting of profits, and other illegal compensation exclusions.
  • Pending and prior litigation.
  • Prior (late) claim notice.
  • Bodily injury/property damage.
  • Insured versus insured claims.
  • ERISA.

The Added Value of Protecting Company Leaders

Aside from paying for claims against company leadership, there are several other benefits to carrying directors and officers liability insurance, including a company’s ability to:

  • Retain Strong Leaders—Many potential directors and officers will be reluctant to join your business if they are exposed to personal liability. D&O liability insurance helps address this issue.
  • Attract Investment—Venture capital and private equity firms often require companies to have D&O coverage before they make an investment.
  • Cover Legal Fees—Even if directors and officers are exonerated of wrongdoing, your business may incur substantial legal fees in responding to a lawsuit against your leadership. If you have a D&O policy, your company’s legal fees will likely be covered.

There are several types of D&O policies, defined by what liabilities, legal costs and other exposures are covered. You should select coverage based on risks and how your business is organized. Your company’s bylaws or articles of incorporation may provide certain protections—or indemnification—for directors and officers. You should seek guidance from your insurance professional about this somewhat complex, technical type of insurance.

Source: Insurance Information Institute, “Director’s and Officers Insurance” http://www.iii.org/ website. Accessed May 9, 2018. http://www.iii.org/article/directors-and-officers-insurance

© Copyright 2018. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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IN: Why Get Directors and Officers Insurance?

Dear Valued Customer,

A wide range of claims against a business have the potential to target company leadership for responsibility—and liability. In this issue of the “———————-“ we’re including information and tips that can ensure you are protected in many ways.

Directors and Officers Insurance (D&O), is about protecting your business from liability issues. While business insurance policies by definition provide coverage for the business itself, individual company officers may still be personally exposed to financial losses resulting from a lawsuit. To protect your company’s leadership, you may want to consider purchasing directors and officers (D&O) liability insurance. Read on for more important information.

We appreciate your continued business and look forward to serving you.

Kind regards,

 

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Work Authorization For Non-U.S. Citizens

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Immigration and Nationality Act of 1952, (INA) as amended

Who is Covered

The Immigration and Nationality Act (INA) is administered by the Office of Foreign Labor Certification (OFLC) of the Employment and Training Administration (ETA). The INA includes provisions addressing employment eligibility, employment verification, and nondiscrimination. These provisions apply to all employers.

Basic Provisions/Requirements

Under the INA, employers may hire only persons who may legally work in the United States (i.e., citizens and nationals of the U.S.) and aliens authorized to work in the U.S. The employer must verify the identity and employment eligibility of anyone to be hired, which includes completing the Employment Eligibility Verification Form (I-9). Employers must keep each I-9 on file for at least three years, or one year after employment ends, whichever is longer.

Employee Rights

The INA protects U.S. citizens and aliens authorized to accept employment in the U.S. from discrimination in hiring or discharge on the basis of national origin and citizenship status.

Recordkeeping, Reporting, Notices and Posters

Notices and Posters

Notices and poster requirements vary by the classification of alien or foreign worker being hired. Please see the specific INA chapters to determine the notices and poster requirements for each immigration category.

Recordkeeping

Recordkeeping requirements vary by the classification of alien or foreign worker being hired. Please see the specific INA chapters to determine the recordkeeping requirements for each immigration category.

Reporting

Reporting requirements vary by the classification of alien or foreign worker being hired. Please see the specific INA chapters to determine the reporting requirements for each immigration category.

Penalties/Sanctions

Employers who fail to complete and/or retain the I-9 forms are subject to penalties. The Department of Homeland Security (DHS) enforces the INA requirements on verification of employment eligibility. The Department of Justice’s (DOJ) Office of Special Counsel for Immigration Related Unfair Employment Practices enforces the anti-discrimination provisions.

Relation to State, Local, and Other Federal Laws

Not applicable.

Compliance Assistance Available

More detailed information, including copies of explanatory brochures and regulatory and interpretative materials, may be obtained from local offices of the Wage and Hour Division and the Employment and Training Administration. Please see the specific INA chapters for more information.

DOL Contacts

Employment and Training Administration, Office of Foreign Labor Certification
E-mail: ETApagemaster@dol.gov
Tel: 1-877-US2JOBS (1-877-872-5627) or 1-202-693-3010; TTY

Wage and Hour Division
Contact WHD
Tel: 1-866-4USWAGE (1-866-487-9243); TTY: 1-877-889-5627

Source: United States Department of Labor, “Work Authorization for Non-U.S. Citizens” http://www.dol.gov website. Accessed December 2, 2015. http://www.dol.gov/compliance/guide/aw.htm

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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Enforce & Administer Our Immigration Laws

Misc_JudgeAndGavelThe Department is focused on smart and effective enforcement of U.S. immigration laws while streamlining and facilitating the legal immigration process.

The Department has fundamentally reformed immigration enforcement, prioritizing the identification and removal of criminal aliens who pose a threat to public safety and targeting employers who knowingly and repeatedly break the law.

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Smart and Effective Enforcement

 

Immigration Enforcement Overview

ICE has adopted common sense policies that ensure our immigration laws are enforced in a way that best enhances public safety, border security and the integrity of the immigration system.

Verifying Identity

DHS uses biometrics to help secure our borders and transportation.

Deferred Action Overview

Young people who were brought to the United States as children and who meet several key criteria will be considered for temporary relief from removal from the country or from being placed in removal proceedings.

Facilitate Legal Immigration

America is a nation of immigrants. That diversity is the backbone of our arts, industry, and culture.

CIS Ombudsman

The Ombudsman helps people resolve problems with U.S. Citizenship and Immigration Services (USCIS) and recommends fixes to systemic USCIS service issues.

Results

Through a multi-layered, risk based system, DHS has taken significant steps to ensure that immigration benefits are not granted to individuals who pose a threat to national security.

Implementation of the Supreme Court Ruling on the Defense of Marriage Act

Statement from former Secretary of Homeland Security Janet Napolitano and Frequently Asked Questions about the Supreme Court ruling on the Defense of Marriage Act.

Combating Human Trafficking

Human trafficking is a form of modern-day slavery, and involves the use of force, fraud, or coercion to exploit human beings for some type of labor or commercial sex purpose. Every year, millions of men, women, and children worldwide—including in the United States—are victims of human trafficking. Victims are often lured with false promises of well-paying jobs or are manipulated by people they trust, but instead are forced or coerced into prostitution, domestic servitude, farm or factory labor, or other types of forced labor.

The U.S. Department of Homeland Security (DHS) is responsible for investigating human trafficking, arresting traffickers and protecting victims. DHS initiates hundreds of investigations and makes numerous arrests every year, using a victim-centered approach. DHS also processes immigration relief through Continued Presence (CP), T visas, and U visas to victims of human trafficking and other designated crimes.

Blue Campaign

In 2010, DHS launched the Blue Campaign, unifying the DHS components to more effectively combat human trafficking through enhanced public awareness, training, victim assistance, and law enforcement investigations. By expanding our collaboration within the department, as well as among domestic and international governments, law enforcement, non-governmental organizations, and the private sector, DHS is helping to protect victims from being trafficked both within the United States and around the world.

Recognize the Indicators of Human Trafficking

Everyone has a role to play in combating human trafficking. Blue Campaign created a variety of resources to inform people about the crime of human trafficking, how to report suspected cases of human trafficking, and how to get involved in combating human trafficking.

Report Suspected Human Trafficking

Report suspected human trafficking activity to law enforcement (available 24/7, in over 300 languages and dialects at):

  • Call 1-866-347-2423 (toll free)
  • Call 1-802-872-6199 (non toll free international)
  • Report online at www.ice.gov/tips

Call the National Human Trafficking Resource Center (NHTRC) at 1-888-3737-888 to get help or connect with a service provider in your area. The NHTRC is not a law enforcement or immigration authority and is operated by a nongovernmental organization.

For more information, please contact the Blue Campaign at bluecampaign@hq.dhs.gov.

Source: Department of Homeland Security, “Enforce and Administer our Immigration Laws” http://www.dhs.gov website. Accessed December 2, 2015. http://www.dhs.gov/administer-immigration-laws

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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I-9, Employment Eligibility Verification

Purpose of Form

Form I-9 is used for verifying the identity and employment authorization of individuals hired for employment in the United States. All U.S. employers must ensure proper completion of Form I-9 for each individual they hire for employment in the United States. This includes citizens and noncitizens. Both employees and employers (or authorized representatives of the employer) must complete the form. On the form, an employee must attest to his or her employment authorization. The employee must also present his or her employer with acceptable documents evidencing identity and employment authorization. The employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and to relate to the employee and record the document information on the Form I-9. The list of acceptable documents can be found on the last page of the form. Employers must retain Form I-9 for a designated period and make it available for inspection by authorized government officers. NOTE: State agencies may use Form I-9. Also, some agricultural recruiters and referrers for a fee may be required to use Form I-9.

Number of Pages

9

Edition Date

03/08/13. No previous editions accepted.

Where to File

Do not file Form I-9 with USCIS or U.S. Immigrations and Customs Enforcement (ICE). Employers must have a completed Form I-9 on file for each person on their payroll who is required to complete the form. Form I-9 must be retained and stored by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials from the Department of Homeland Security, Department of Labor, or Department of Justice.

Filing Fee

$0

Special Instructions

The Spanish version of Form I-9 may be filled out by employers and employees in Puerto Rico ONLY. Spanish-speaking employers and employees in the 50 states and other U.S. territories may print this for their reference, but may only complete the form in English to meet employment eligibility verification requirements.

This page can be found at http://www.uscis.gov/i-9

Source: Department of Homeland Security, “I-9, Employment Eligibility Verification” http://www.uscis.gov website. Accessed December 2, 2015. http://www.uscis.gov/i-9

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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IN: Immigration Law & Employer Compliance

Dear Valued Customer,

It’s a new era for employer liability strengthened by renewed DHS efforts to target employers who knowingly violate the law. In this issue of the “——————” we focus on Immigration Law and Employer Compliance.

Statistics from the Department of Homeland Security (DHS) Office of Immigration Statistics indicate that in recent years, the unauthorized population grew by 27 percent. Read on to understand Work Authorization for Non-U.S. Citizens, I-9, Employment Eligibility Verification, what is the Foreign Labor Certification Process for hiring foreign workers, and much more.

We appreciate your continued business and look forward to serving you.

Kind regards,

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IN: What Does Kidnap & Ransom Insurance Cover?

Dear Valued Customer,

This issue of the “——————-“ is focused on Kidnap & Ransom Insurance.

According to the Havocscope threat index, the estimated present global impact of the threats of kidnap and ransom stands at $1.5 billion.

Please read on to understand more about this threat, what K&R insurance is and what it covers. When you take into account that the average ransom demand last year was $2 million and that this threat increases daily, we urge you to consider your situation.

We appreciate your continued business and look forward to serving you.

Kind regards,