Management Liability. How do insurers calculate the premium for directors and officers insurance?

There are a number of different rating factors that insurers take into consideration when calculating the premium for directors’ and officers’ liability insurance (also know as Management Liability Portfolio)

The main rating factor is the financial information of the company and as limited companies are compelled to file annual returns with Companies House, underwriters can obtain this data readily within the public domain. For companies that are less than 2 years old, the underwriters will normally require sight of the management accounts and possibly the business plan.

Another rating factor will be the industry sector within which the company operates; areas that may concern underwriters are companies involved within financial services sector, sports clubs, video games software, bio-tech and pharmaceutical sectors.

Insurers will also need to know if there are any planned mergers or acquisitions or if any redundancies are likely. If the company generates any turnover from the USA/Canada or has assets in those territories, this will have a bearing on the premium.

The essential rating factor is that the company should have a positive net worth.

Finally, the chosen indemnity limit will affect the premium. The lowest indemnity limit is normally £100,000. Most companies will generally have any indemnity limit of between £500,000 and £1,000,000.

If you would like further information or a quotation for directors’ and officers’ liability cover, please contact us on 0118 916 5480 or complete one of our enquiry forms online.

*Information correct as of 1st May 2016

Author: Dennis Walsh | July 3rd, 2012

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Dennis Walsh
Get in touch:   Reading: 0118 916 5480   London: 020 7036 8767   info@macbeths.co.uk