Monthly Archives: December 2015

Side A D&O Product Insights

RLI has introduced its Enhanced Side A D&O product, a coverage line that is seeing important coverage enhancements.  I recently had the chance to interview RLI’s Chad Berberich, Vice President of its Executive Products Group, about his company’s approach to the coverage, his view of the market, and his experience with the brokerage community’s interest in Side A products.

The Betterley Report has been reviewing Side A D&O policies in its October issue since 2004.  27 different carriers are included in the 2015 Report, which can be viewed at www.betterley.com

Rick: Chad, you’ve recently introduced RLI’s new Enhanced Side A D&O policy to the market.  How is it different from your existing product?

Chad:  The new Side A D&O policy is a wholesale rewrite of the prior policy form, so the changes are pretty substantive. Changes were made to incorporate many things that were commonly endorsed on the old form into the body of the new policy. There were also a number of coverage enhancements made, such as including:

  • Two policy limit reinstatements
  • Deleting all the exclusions except the conduct exclusion (and narrowing that exclusion), and
  • Defining and providing coverage for a Cyber Claim

Rick: Were these changes driven by client/broker requests?

Chad:  Yes, the changes were driven by both client and broker requests, along with a desire to have a very competitive policy in the marketplace. Executives today are operating in a dynamic and complex business environment where the risks they face are constantly changing. We strive to anticipate the changing needs of our customers and modify existing products, or develop new products, to ensure we are providing them with the most comprehensive protection possible. The new Side A D&O Policy and new Representations and Warranties Liability Policy that we just announced are two recent examples of how we are shaping our products and insurance solutions to better serve the executive suite.

Rick: I see the market for Side A as primarily public companies, which is largely saturated.  Do you agree with my observation?

Chad:  Historically it has been public companies that buy Side A D&O policies, but there continues to be opportunity for growth in other market segments, such as nonprofits and larger private companies. And yes, I would agree that there is plenty of capacity.

Rick: I’ve been saying for years ‘why aren’t large not-for-profits buying Side A?’  It seems carriers agree with me, but I have yet to hear a good reason from the brokers that serve that market.  What do you think are the reasons?

Chad:  We’ve actually seen larger nonprofits and larger private companies start to buy Side A – those classes have been a strong source of new business for us over the last year or so. I think brokers have long promoted Side A to their larger private and nonprofit clients and the coverage has become more widely known and better understood than it was a few years ago. With increased awareness about the need for Side A coverage in this market, we’re starting to see more interested buyers.

Rick: What will it take for large not-for-profits to start buying Side A?

Chad:  We’re already seeing more buyers in the not-for-profit space. As brokers focus more on talking about the product with those customers and helping educate them on the unique risks they face and how Side A coverage can reduce their exposure, sales of the product will increase.

Demand would also increase if there was any significant loss activity where a given nonprofit organization was unable to indemnify the directors or officers. Given that board members on large nonprofit organizations are often prominent members of the community and often have substantial personal assets, they are uniquely exposed when they accept a position on the board of a large nonprofit organization.

Rick: Do you find that most Side A policies are largely sold by a relatively small number of brokers?

Chad:  I think any broker that sells D&O is selling Side A.

Rick: Do you find the non-global and regional brokers knowledgeable about Side A?

Chad:  I do – the non-global and regional brokers are savvy and hungry. They know the product and are definitely selling Side A.

Rick: Do you think that Side A will ever be bought in quantity by non-public insureds (i.e., large private companies and not-for-profits)?

Chad: I don’t think we will see the same limits purchased by nonprofits and private companies compared to public companies, but do believe that those nonprofits and private companies will buy more policies as time goes on and their awareness and understanding about the need for Side A coverage continues to grow.

Rick: Thank you, Chad.  I appreciate your sharing your inside knowledge of the Side A marketplace and the opportunity to highlight the changes in your new policy.

About Chad Berberich and the RLI Executive Products Group:

Chad Berberich is Vice President of the RLI Executive Products Group, a division of RLI that offers a comprehensive portfolio of professional liability insurance coverages for the Executive Suite. To learn more about the RLI Executive Products Group and its Side A DIC D&O liability policy, visit www.rli-epg.com or contact Chad Berberich at (972) 677-2116 or Chad.Berberich@rlicorp.com.

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