Managment Liability Blind Spots - The Georgia Center of Innovation ...

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Managment Liability Blind Spots - The Georgia Center of Innovation ...

MANAGEMENT LIABILITY BLIND SPOTS

Insurance coverage insights for Logistics, Transportation, Supply Chain, and Technology

Companies


The Center of Innovation for

Logistics

The Center of Innovation for Logistics is the leading

statewide resource for fueling logistics industry

growth and global competitiveness in Georgia. The

Center directly helps companies to overcome

challenges and capitalize on opportunities related to

the movement of freight. We provide focused

expertise, specific industry data, connections to state

resources, and an extensive cross-sector industry

network.

STERLING RISK ADVISORS

Sterling Risk Advisors, Inc. is a Risk Management,

Insurance, and Surety Brokerage Firm serving the

Commercial, Professional, and Personal insurance

needs of clients across the Southeastern United States.

Sterling has built is reputation on a commitment to

understanding and serving the specialized needs

within several specialized industry niches, including

Logistics, Transportation, Supply Chain Management,

and Technology.


PRESENTERS

Page Siplon, Executive Director

Georgia Center for Innovation in Logistics

(912) 966-7867

psiplon@georgia.org

Garret Lazenby, Logistics Risk Specialist

Sterling Risk Advisors, Inc.

(678) 424-6505

glazenby@sterlingriskadvisors.com

Sandy Lake, Associate Director

Georgia Center for Innovation in Logistics

(678) 502-6233

slake@georgia.org

Darrin Kurth, Management Liability Specialist

Sterling Risk Advisors, Inc.

(678) 419-5343

dkurth@sterlingriskadvisors.com


TODAY’S AGENDA

Introduction

Management Liability Coverages

Miscellaneous Insurance Coverages

Questions


MANAGEMENT LIABILITY CONSIDERATIONS

• Group of coverages that are related to “professional” management activities

• Frequent confusion as to what are covered

• Non-standard policy language and coverage forms

• Coverages are highly “dovetailed” to coordinate with related coverages

• Frequent confusion over “Claims Made Coverage”

• Risks insured by management liability are complex in nature

• Claims occur infrequently but are often large in size

• Regardless of actual damages, claims usually result in high defense costs

• Premium is often lower than anticipated


DIRECTORS & OFFICERS LIABILITY INSURANCE (D&O)

Provides coverage for Directors, Officers, Managers, Employees and the Organization when

those individuals are sued for acts or omissions committed while acting on behalf of their

company.

Claim Scenarios

• Violation of Non-Compete Contract

• Anti-Competitive trade practices

• Misrepresentation of capabilities in contract negotiations

Blind Spots

• Assumption that coverage is provided under General Liability

• Notion that only large companies need D&O

• Good relationships and reputation negate the need for coverage

• Outside directorship responsibilities can incur liability

• Insured versus insured exclusions


EMPLOYMENT PRACTICES LIABILITY INSURANCE (EPL)

Provides protection for an organization and its managers against claims made by employees

and outside individuals with respect to discrimination, wrongful termination, sexual

harassment, and other employment-related allegations.

Claim Scenarios

• Wrongful termination

• Sexual harassment of employees

• Sexual harassment by employees

• Discriminatory hiring practices

Blind Spots

• Use of Private Employer Organizations negates the need for coverage

• Happy employees and good reputations eliminate claims

• Failure to properly document employment and disciplinary decisions


FIDUCIARY LIABILITY INSURANCE

Provides protection for Plan Fiduciaries for allegations of breach of fiduciary duties for ERISA

and non-ERISA benefit plans.

Claims Scenarios

• Improper selection of plan or plan options

• Improper administration of beneficiary information

Blind Spots

• Not the same thing as Fiduciary Dishonesty coverage

• Often can be included with D&O or EPL for minimal additional premium

• Employee directed or defined contribution plans have no risk


ERRORS & OMISSIONS LIABILITY INSURANCE (E&O)

Provides coverage defense costs and damages arising out of allegations of negligent acts or

omissions resulting from a firm’s “professional” activities. Applies to a broad range of firms

such as Freight Brokering, Freight Forwarding, Software Development, Consulting,

Warehousing/Fulfillment, Customs Brokerage, etc.

Claim Scenarios

• Freight broker fails to follow carrier/broker due diligence

• Failure to follow written instructions by warehouse/fulfillment operation

• Customs Broker fails to advise proper harmonized classification code to importer

Blind Spots

• Assumption that losses will be covered by General Liability

• Lack of claims means no future claims are possible

• Underwriting standards increase with size and experience

• Long-tail exposure to claims


CYBER LIABILITY INSURANCE

Provides coverage for allegations of negligence in the handling of data owned by third

parties. Also includes Third Party Notification Expenses and “Social Media” related liability.

Common Claims

• A computer virus disrupts ability of most employees to utilize workstations

The loss of laptop containing customer and vendor information

Theft of confidential information from vendor’s server

Theft of physical documents in a warehouse containing personal data

• Defamation of competitor using social media

Blind Spots

• We’re not a technology company

• We outsource that to a vendor

• Most of our information is on paper, not electronic

• We don’t have customer information

• Numerous state and federal regulations

• Notification costs and requirements can be substantial

• Contractual language can be detrimental


CRIME INSURANCE

Coverage for theft of property provided through modular policies that cover Employee

Dishonesty, Money & Securities, Computer Fraud, and related coverages.

Claim Scenarios

• Burglary of goods stored in a warehouse

Theft of customer goods by a company driver

Theft of funds by an organized crime circuit

• Daily theft of funds by an employed accountant

Blind Spots

• Proper treatment of independent contractors

• Only one or two people have access to our accounts

• Limitations on banking institution coverage

• Nobody would want to steal from us

• Increasing relationship to Cyber Liability and Errors & Omissions


MISCELLANEOUS INSURANCE COVERAGES

• International Insurance Coverage

• Kidnap, Ransom, and Extortion Insurance

• Crisis Management Insurance


QUESTIONS FROM TODAY’S DISCUSSION

• Directors & Officers Insurance (D&O)

• Employment Practices Liability Insurance (EPL)

• Fiduciary Insurance

• Errors & Omissions Insurance (E&O)

• Cyber Liability Insurance

• Crime Insurance

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