Management Liability Insurance: Brokers Helping Amid Coronavirus

How Brokers Can Help Businesses Struggling Because of COVID-19 | Risk & Insurance

Here are three things brokers should consider when seeking management liability insurance solutions for companies strained by the current financial crisis.

Closeup shot of a handsome young call centre agent working in his office

This article was republished with permission from Risk & Insurance

By Rich Edsall, Tom McArdle and Cary Nichols

The economic impact of the COVID-19 pandemic has shaken up virtually every industry, revealing the vulnerabilities of the global economy. As a result, many public and private companies are struggling to survive the challenges of the current financial crisis. Those with the biggest exposures may find it necessary to file for bankruptcy protection and/or undergo restructuring.

Finding the right kind of professional liability solutions, including directors and officers, employment practices, and fiduciary, will be particularly important for such companies as they navigate post-claim situations and other complicated scenarios. Brokers can help policyholders find the coverage they need by studying past financial crises to learn what to expect and by seeking out an insurance partner highly skilled in structuring complicated policies.

1. Learn from past financial crises

Corporate bankruptcies spike during recessions. Based on past financial crises, such as the subprime mortgage crisis of 2007–08, we anticipate more bankruptcies, restructurings and claims will be filed as a result of COVID-19. A lot of companies have seen their business shrink dramatically as a result of the pandemic, with stay-at-home orders and social distancing requirements driving down demand for their goods and services. In just one example, the pandemic has reduced North American refining demand, plummeting the demand for gasoline in the U.S. to its lowest level in more than 50 years and the demand for jet fuel to its lowest level ever recorded, according to S&P Global Ratings.

2. Finding the right solutions may be harder now

Brokers face the challenge of placing business for an underserved market. They should seek out underwriters who are prepared to offer the kinds of solutions their clients need for complex, high-hazard transactions. These are not standard claims, and finding the necessarily specialized solutions will be harder as some insurers respond to the crisis by pulling back.

Extreme circumstances call for innovative approaches. At Argo Pro, we have drawn upon our commercial management liability insurance expertise to create the Corporate Solutions Group. The group brings together subject matter experts, including underwriters, claims and defense counsel, to handle these specialized transactions. As a result, the group is able to provide solutions on a timely and consistent basis.

3. Your clients will prize responsive claims and defense services

While engaging an expert underwriting team is essential, brokers also should evaluate whether essential services such as claims and defense counsel are offered in house or by third parties. Policyholders will highly value the speed, efficiency and overall responsiveness in-house, expert claims and defense teams provide.

Much as COVID-19 has forced innovation in schools, workplaces and day-to-day public life, it also requires brokers to be creative and nimble in their approach as they work to help companies in a distressed state. Finding the best solutions for management liability insurance clients requires brokers to focus on the track record and creativity of underwriting operations.

Rich Edsall is senior vice president, commercial; Tom McArdle is senior vice president, Mid-West regional leader; and Cary Nichols is senior vice president, underwriting, for the Western region for Argo Pro. 

Learn more about Argo Pro.