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How is D&O insurance rated?

default avatarPlan Cover Staff asked 3 years ago
1 Answers

Best Answer

default avatarSrinivasan Mahadevan answered 2 years ago
Directors and Officers Liability insurance is a liability insurance covering Directors and Officers of your company from claims made against them when they are serving on a company’s Board of Directors or as an officer. 

Every D&O insurance policy begins with a formal application for coverage. Insurance companies use the proposal form and underwriting process to determine the rating. The information collected during the application and underwriting process allows insurance companies to assess risk and price the risk appropriately. 
In addition to the proposal form, companies have to submit a series of supporting documents including:

  • Audited financial statements
  • Annual statements
  • A complete list of directors, trustees, executives and officers

Underwriting considerations for Rating:
Insurers use following information to price the D&O liability insurance policies: 

  1. Type and history of business operations
  2. Ownership structure 
  3. Publicly traded companies often have the most risk and insurers consider accounting practices, corporate structure, stock price volatility, disclosure practices and corporate governance structures. 
  4. Financial Condition – Insurers will look into key data points in the income statement and balance sheet. Profit margins, company’s assets and liabilities, debt-equity rations, and any outstanding debts and dues are also considered for pricing the policy.
  5. Any Merger and Acquisition activities exposure.
  6. Claims history and any reported litigations. 

Get in touch with PlanCover, a highly reputed insurance broker serving a wide range of businesses in the Indian market, to buy suitable insurance policies that practically benefit your company.