Author Archive

Grey Swan

Grey Swan provides specialized independent insurance advice delivering a focused perspective to clients that is based on the over 25 years of insurance industry, legal, and claims experience that our founder brings to the table.

Privacy Insurance: A Hot Topic

Grey Swan,

Privacy is the new black. Actually, people have been saying that for at least five years, so maybe privacy is the old black. But black never goes out of style, and privacy issues are never out of season either. The Privacy Rights Clearinghouse reports that, in 2011, there were 535 breaches affecting 30.4 million sensitive records. This is in the US alone, and these are very, very conservative figures. Privacy is a hot button issue, but many companies are not insuring themselves – or insuring themselves effectively – against the threat.

Canada does not see the volume and magnitude of privacy cases as our neighbor to the south, but that other shoe is dangling. According to the PRC, “Unfortunately, it is virtually impossible for individuals to protect themselves from a data breach. It is up to organizations that collect data on consumers to take the steps to ensure the privacy and security of the data they collect and maintain.”

Claims Made vs. Occurrence Policies

Grey Swan,

Any practicing professional, whether a lawyer, broker, accountant, or architect, can, and should, opt to carry E&O (Errors and Omissions) coverage. These professional liability policies are a must in litigation-prone, high-risk fields. So, let’s say you are a broker. In 2005, you carried a $1 million policy. It’s 2012 and you’ve bumped that up to $2 million. A client you worked for in 2005 files a claim against you now and is awarded $1.5 million in damages. Are you covered for the full amount or not? That depends on whether you have a claims made policy or an occurrence policy. What’s the difference, and what does this have to do with your D&O insurance?

If you had an occurrence policy, you would be, as they say, SOL. This would cover errors which took place when the policy was in place. Your insurance in 2005, when you worked with the client, was only for $1 million. You would be uncovered, then, for the difference of $500,000.

Who Needs D&O Insurance?

Grey Swan,

Towers Watson’s Larry Racioppo, says that it is clear that directors and officers are “concerned about the exposures they face… Whether it is traditional securities class action litigation, M&A-related activity, derivative actions, or threats from a wide range of regulatory or law enforcement agencies, directors and officers – and the companies they represent – are seemingly under siege from a wide array of potential claimants.” In a litigious environment, D&O insurance is increasingly necessary. But who exactly needs it?

If you have officers and directors, you do! That’s the short answer, but it’s also the best one. D&O is appropriate for:

Most Popular Articles

Privacy Liability And Insurance

It has become common place to see news headlines stocked with shocking revelations of cyber hacking and privacy breaches, often pertaining to hundreds of thousands of records. This article...

Fiduciary Liability Insurance

Fiduciary liability insurance is often thought of as the ugly cousin of directors and officers liability insurance. Often misunderstood and ignored, Fiduciary Liability insurance is...

5 Things Every Insurance Company Needs to Know About Privacy Insurance

The first auto insurance policy was issued in the U.S. in 1898 and offered US$5,000 of liability coverage to Dr. Truman Martin of Buffalo, New York. As the Insurance Journal remarks, “Martin would likely have...