By MIKE SCHWANDER, executive vice president, and KEN CAPONE, senior vice president of Lockton's Financial Services practice in Denver
(1) Do not treat the D&O insurance product as a commodity. Price is always a factor, but coverage is far more important. Crafting language takes effort and usually costs money. No one likes to pay for insurance policies, but then again, they are often the first contracts we look to when things go bad.
(2) Time can be a weapon. Make sure the process begins many months in advance of your renewal. Give yourself ample time to prepare, analyze your options and understand the ramifications of your decisions. Preparation pays off.
(3) Pick your insurance partners well. All too often, companies move their business to the insurance company having the latest "blue-light special." Avoid this strategy. It rarely works in the short term and never works in the long run.
(4) Know your insurers. Over the long term in this business, relationships count. The old saying, "It is easy to cause pain to strangers," holds true. Make the effort to get to know your underwriters and the claim staff that will handle your claims. Long-term relationships are more profitable than short-term transactions.
(5) Submissions should be professional, well-thought-out and relevant. For financial institutions, these are times when you want to be differentiated from the competition. From an underwriting perspective, "Be the best-looking dog in the pound."
(6) Underwriting meetings/calls are a terrific way to present your case. Pick the proper executives to represent your company. Remember that passion sells.
(7) Use several carriers in your program. It gives you flexibility.
(8) Do not use full capacity of any individual carrier in one large block. Break it up.
(9) Consider creative alternatives to program structures that may not have made sense in soft market conditions but can offer long-term solutions.
April 15, 2009
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