Insurance agencies offer a variety of coverages, but they need just as much insurance to protect themselves—sometimes more. Insurance agents face a lot of risk by the nature of the job. Handling sensitive information, speaking with clients, providing advice and billing are all activities an insurance agent may do in a given day that could cause an issue down the road. One small mistake could cause a lawsuit, and you want to make sure your agency’s assets and reputation are protected.
There are many reasons an insurance agency should carry directors and officers insurance.
1. Attract and Retain Strong Employees
Retaining employees is difficult and retaining good leaders is even harder. Potential directors or officers may hesitate to join your company if there isn’t a D&O in place to protect them. Directors and officers that are hired may be more inclined to remain somewhere that ensures they won’t have to risk their own assets. Having a D&O policy can make potential employees feel secure enough to stay.
2. Cover Legal Fees
Obviously, lawsuits are expensive. Smaller insurance agencies don’t have the same kind of cushion to draw from in order to pay expensive legal fees. The longer a lawsuit lasts, the more your company will pay. With a D&O policy, you don’t have to worry about draining your insurance agency’s savings in defensive fees.
3. Attract More investors
Investors will also feel more comfortable knowing that you carry insurance for your directors’ and officers’ actions. Some investors actually require D&O insurance before investing.
4. Protect the Agency from Financial Loss
If an accusation falls on an employee’s shoulders, it may be the employee’s responsibility to pay for the legal fees. This doesn’t mean the agency won’t suffer, however. The agency may also be held liable for the employee’s actions and may lose money while the employee is out due to a lawsuit, plus the cost of possibly replacing the employee. Claim payments concerning D&O are rising. Protect your directors, officers and agency with the correct amount of insurance.
D&O Insurance doesn’t cover criminal or intentional acts. If the director or officer is found guilty, the insurance company holding your policy may retrieve the defense expenses they paid. While D&O insurance doesn’t cover everything, it’s an important policy for insurance companies to consider. Keeping valuable directors and officers is crucial to having a successful company.
Also Read: E & O Insurance for Insurance Companies