How can UK SME businesses buy Directors’ and Officers’ insurance if they don’t know it exists

I couldn't help but be slightly surprised by the recent Allianz research that revealed that 66% of UK SME’s don’t know about the existence of Directors’ and Officers’ management liability insurance protection (hats off to Allianz for identifying this).

I suppose this probably goes some way to explaining why sales in relation to this product class emanating from the UK SME community have remained relatively low. 

I wonder if similar research was undertaken in relation to other specialist insurance classes that it wouldn't reveal similar findings.

My guess is that there are at least two main contributing factors behind why UK SME's are not aware that they can buy Directors' and Officers' insurance to protect themselves (there are doubtless others):

Communication and marketing

As long ago as 1961 two marketing experts Robert J Lavidge and Gary A Steiner devised a marketing communication model, that suggested that there are six steps that all consumers take before making an eventual purchase:

- Awareness

Knowledge

- Liking

- Preference

- Conviction

- Purchase

The points above describe the intuitive hoops we all jump through when we buy a product/service and to some extent it’s difficult to see how, without a basic AWARENESS, anyone can move through the process (ending with a purchase).

Against the backdrop of the above and the clear evidence, it would seem that there is a massive opportunity for insurance broking marketers to start the process of raising awareness of D&O insurance within the SME community.

In first instance, a simple cross selling campaign aimed at raising awareness to all existing clients would seem to be the logical place to start (concentrate on new D&O clients later).

Knowledge and Education

Having spent many years working for various insurance broking firms, my guess is that all too often the main focus of attention tends to be those insurance coverages that are obvious and that we all know and love i.e.. property, motor and general liability.    

It strikes me that one of the main contributing factors to the focus on more traditional forms of insurance protection is a lack of knowledge and education, after all, how can a broker have a rounded professional conversation with a client if they are unable to talk knowledgeably about a client’s potential D&O risk exposure.

The fact is; D&O isn’t any more complicated than many other classes of insurance. To be fair, it does have its own peccadillo’s and its own lexicon, but it is all inordinately understandable with some training.

The good news is that gaps in knowledge are bridgeable and help is certainly at hand.  I am yet to come across an insurer that offers D&O that wouldn't’t be delighted to offer some form of training and support to help a broker better understand this product.

At a time when the industry is coming under the microscope it is perhaps more important than ever that paper trials exist to show that the subject of D&O (and other classes) have been discussed with clients.  Least of all it will help to prevent future Professional Indemnity claims.

 

 

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Comments

Paul, everything you have written is so true. Some people perceive there is an air of mystery  regarding D&O coverage. As an underwriter for this class's of business I spend a lot of my time educating brokers and clients as to their exposures and the need for protection.  

It still amazes me someone will take on the position of a director without realising the potential exposures they are opening themselves upto.  The premiums are cheap in relation to the potential legal costs....

Company name: 
ACE European Group Ltd
I agree with the above terms: 

I too agree with the comments made so far. Education is the key.

The role of the broker is essential. Once they understand their client's exposure and the benefits of a D & O policy, they can confidently discuss this with their clients.

Unfortunately, in my experience, the time in front of client is limited, often centred around the renewal of their portfolio. This involves undertaking a review of the traditional covers -property, business interruption, liability, motor not to mention professional indemnity, contract works, marine/goods in transit, travel, personal accident etc.

By the time this is completed with the necessary explanations given, for example, the need to ensure the adequacy of sums insured and the basis on which they should be calculated, highlighting warranties and onerous terms and the consequence of non compliance, how much time is left to discuss other covers ?

D & O is likely to be on the list but so should the other management liability covers - corporate liability (entity cover) and Employment Practices Liability. Then there are the other risks - cyber liability being a good example.

By the time you get to this stage, can you really be sure you have the client's full attention ?

A separate campaign to raise the awareness of Management Liability is certainly the way forward.

 

Company name: 
rradar Ltd
I agree with the above terms: 

It's the channels wherein the problem lays. 

Brokers just cannot be bothered to sell GBP250 or GBP500 individual policies as there's no margin in it for them.

Underwriters cannot be bothered to sell/write these on facultative basis as there's too much admin and, again, not much margin.

An on-line, quote/bind/pay/produce policy is the answer (imho) but I am yet to see one actually built and activley promoted to the SME community.

Company name: 
QBE
I agree with the above terms: 

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