MANAGEMENT LIABILITY BLIND SPOTS. Insurance coverage insights for Logistics, Transportation, Supply Chain, and Technology Companies

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1 MANAGEMENT LIABILITY BLIND SPOTS Insurance coverage insights for Logistics, Transportation, Supply Chain, and Technology Companies

2 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.

3 PRESENTERS Page Siplon, Executive Director Georgia Center for Innovation in Logistics (912) Garret Lazenby, Logistics Risk Specialist Sterling Risk Advisors, Inc. (678) Sandy Lake, Associate Director Georgia Center for Innovation in Logistics (678) Darrin Kurth, Management Liability Specialist Sterling Risk Advisors, Inc. (678)

4 TODAY S AGENDA Introduction Management Liability Coverages Miscellaneous Insurance Coverages Questions

5 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

6 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

7 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

8 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

9 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

10 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

11 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

12 MISCELLANEOUS INSURANCE COVERAGES International Insurance Coverage Kidnap, Ransom, and Extortion Insurance Crisis Management Insurance

13 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