Entity on the Table
Yet another judgment call: whether coverage for the entity — as opposed to that of individual directors and officers — should be included in the policy. "In recent years, it's been a throw-in," says Don Bailey, managing director of Aon risk management in Denver. "Now it's negotiable."
Those negotiations turn largely on treaty negotiations between reinsurers and primary insurers — not insurers and their clients. Some reinsurers are beginning to insist, for instance, that carriers take entity coverage out of D&O contracts or add a coinsurance provision for it.
Still, entity coverage is the least of a risk manager's worries at the moment. "I would be surprised if entity was pulled out of the contract this year," says Aon's Bailey. But if losses continue to mount, he cautions, "it could be a possibility for next year."
Something to look forward to.
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