D&O and EPL Coverage: How COVID Has Impacted Private Company Insurance
COVID-19 has impacted almost every area of our lives at home and our businesses. It has also impacted private companies’ ability to obtain, renew, or pay for D&O and EPL Insurance, even as COVID-related claims are rising.
Directors & Officers insurance protects company officers and directors if they make mistakes or poor decisions as they operate the business. Employment Practices Liability provides coverage for any issues arising out of employment practices, such as safety, discrimination, sexual harassment, and wage and hour disputes. COVID has significantly shifted the landscape of these insurance markets so that businesses face increased premiums, greater underwriting scrutiny on renewal policies, and less carrier willingness to write new policies.
Rising Claims
Higher D&O and EPL Premiums
Private companies are currently seeing their D&O premiums rise an average of 10 percent to 20 percent, and EPL premiums rise an average of 6.3 percent because insurers perceive more financial risk. Executives may need to choose between broader coverage that better protects them during the pandemic or saving money.
Increased Underwriting Scrutiny for Renewals
Small business executives should be prepared to answer more questions when renewing their policies. In particular, you’ll likely be asked about all the direct and indirect impacts related to COVID, how you are ensuring employees’ safety and compliance with regulations, and whether you consult attorneys when making significant employment-related decisions.
You may want to reassess employment reduction decisions made previously to see whether they could be viewed as having been hasty or ill-advised. Companies that lead with compassion may have the best shot at renewing without facing higher than average price increases or coverage exclusions. Also, be prepared for the renewal process to take longer and that you may not be able to attain coverage enhancements.
New Policies
If you seek a policy for the first time, be prepared for even more scrutiny than those who are renewing. Be prepared to document how you are following all safety and health regulations and keeping track of any changes in these regulations. Avoid focusing exclusively on COVID-19, but also be prepared to discuss how you are mitigating all risks. Market your safety efforts with quantitative information, but also with qualitative information such as the availability of company executives.