CGU CONNECT MANAGEMENT LIABILITY Information Webinar

Stephanie Myers/Kate El-Asmar

IAG PRI Underwriting

21 January 2016

Version No. 1.0

YOUR FACILITATORS FOR TODAY

Kate El-Asmar

Team Leader, Connect PI & Affinity

CGU Insurance

Stephanie Myers

National Portfolio Solutions Mgr

CGU Insurance

AGENDA

Professional Risks

CGU Connect Management Liability

CGU Business Protection Management Liability

What is Management Liability? Coverage’s available under a Management Liability policy Claims examples – Notification Overview Potential policy pitfalls

Product Offering & Overview Proposition Target Market Risk Appetite Decline Risks Benefits & Selling Points Cyber Update

Professional Risks Team

Key Contacts

CGU Connect Management Liability Overview

MANAGEMENT LIABILITY

What is it?

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Management liability is a bundled product which protects directors and officers and the company itself from exposure’s relating to the management of the company. A company and its Directors & Officers can face both personal and corporate liabilities from: Shareholders Employees Regulators Customers Creditors Competitors Administrators

MANAGEMENT LIABILITY

Coverage’s Available Under a Management Liability Policy

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Directors and Officers Employment Practices Statutory Liability Company/ Entity

Fidelity/Crime Tax Audit Trustees Liability

Optional

Internet/Cyber Liability

DIRECTORS AND OFFICERS LIABILITY

Covers directors and officers for their liability for any Wrongful Act.

A Wrongful Act is usually defined as any actual or alleged neglect, error, misstatement, omission or breach of authority.

What is it?

DIRECTORS AND OFFICERS LIABILITY Where do claims come from?

Shareholders Mismanagement of company assets, insolvency, mergers & acquisitions etc.

Employees Harassment, discrimination,

failure to promote etc.

Regulatory Bodies ASIC, ACCC, ATO etc.

Creditors Action to recover debts. Liquidators / Receivers Wrongful trading etc.

EMPLOYMENT PRACTICES LIABILITY

Covers claims alleging an employment breach such as: discrimination harassment bullying wrongful dismissal failure to promote breach of contract

brought by employees, volunteers or potential employees

What is it?

EMPLOYMENT PRACTICES LIABILITY

A small retailer forced to make some redundancies due to a downturn in revenue. All appropriate procedures were followed but 3 employees felt they were being discriminated against due to their mature age.

Claims were made for discrimination and the company ended up settling with each employee at a cost of $20,000 each.

In 2006, a young woman committed suicide after enduring ongoing bullying by her co-workers at a café.

Each offender and the company were convicted and fined under provisions of the Occupational Health and Safety Act. Total fines were $335,000

Claims Examples

STATUTORY LIABILITY

Provides cover for the Company for any formal investigation by a regulatory, governmental, professional or other authorised institution for a breach of an Act of Parliament.

Includes defence costs incurred and resulting Statutory Fine (subject to policy terms).

Significant increase in claim activity over the last few years.

Over 5,000 individual legislative provisions that can result in fines or penalties.

700 provisions can find a Director personally liable.

Work Health & Safety is cited as a key area of cover, however there are many other statutes e.g. Food Act, Liquor Act, Privacy Act, Pollution legislation etc.

What is it?

STATUTORY LIABILITY

Health & Safety

A 35-year-old employee suffered fatal injuries when the fabric sling supporting a 1.8 tonne monorail beam snapped and the beam fell on him. The construction company was convicted and fined $200,000 plus costs. The Director was also convicted and fined $200,000 plus costs plus compensation of $20,000 after pleading guilty to a breach of s61 of the Occupational Health, Safety and Welfare Act 1986.

Claims Example

COMPANY LIABILITY

Provides cover for the Company for costs incurred in defending and settling claims bought by third parties.

Claims could come from: Competitors Creditors Customers

What is it?

COMPANY LIABILITY Claims Example

A small café was sued by a competitor for misleading advertising which was alleged to have caused a considerable downturn in business for its competitor. Whilst the Insured successfully defended the allegations, defence costs totalled $30k.

CRIME

Indemnifies the Company for employee dishonesty and third party dishonesty

Crime loss is on the increase and can significantly impact Company’s financials

Crime loss is sub-limited

Automatically covered under CGU BPML Policy

What is it?

INTERNET LIABILITY

Protects the Company against third party claims for:

Unintentional defamatory statements posted on the company's internet, intranet or in emails sent

by employees

Accidental plagiarism, infringement of copyright, trade mark etc

Accidental breach of privacy or unauthorised collection of customers data

Negligent transmission of a computer virus, worm, logic bomb

or Trojan Horse.

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What is it?

CLAIMS NOTIFICATIONS

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EPL Claims 30%

Crime/Fidelity 25%

Stat Liability 15%

D&O/Company 20%

Tax Audit 10%

POTENTIAL POLICY PITFALLS

Statutory Liability cover • Limited to just WH&S and Pollution legislation

• No Pollution cover

• No cover for Consumer Protection legislation or Copyright legislation

• Inadequate sub-limit

• No cover for Statutory fines relating to Employment Practices Liability claims

Fidelity/Crime cover

• Definition of Fidelity/Crime Loss inadequate

• Retroactive Date applies

• Shareholder exclusion

• No cover for theft by a director

• Exclusion relating to discovery of the alleged Fidelity/Crime Loss

Tax Audit cover • No cover for individuals or self managed super funds

• No cover for compliance reviews

CGU’S MANAGEMENT LIABILITY PROPOSITION

An SME proposition

Transacted via Sunrise – ML Connect

Targeting SME’s with turnover up to $25m

Stand alone policy

Most sole traders and partnerships can be covered

BUSINESS PROTECTION MANAGEMENT LIABILITY

Combined limits from $1m - $10m available Separate limits from $250k - $5m (except Stat $2m) No financials required unless insolvency is requested Standard excesses Directors & Officers/Company Reimbursement $Nil Statutory Liability $2,500 Employment Practices Liability $5,000 Company Liability $2,500 Tax Audit $1,000 Crime $5,000

* Some industries may attract higher excesses

Premiums from $750.00 + charges Standard commission online is 22.5%

(BPML)

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BUSINESS PROTECTION MANAGEMENT LIABILITY

The target market of BPML is SME (Private Companies, sole traders, most partnerships and non-profit entities):

With turnover under $10m up to a max turnover of $25m

Who have been operating for more than 12 months

Who have not had any claims or investigations.

Target Market

BUSINESS PROTECTION MANAGEMENT LIABILITY

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Coverage Part 1 Directors & Officers / Company

Reimbursement

Includes Company Reimbursement

Statutory Liability Claims made

against Directors & Officers

Employment Practices Liability

claims brought against Directors

& Officers

Trustees Liability for employer

sponsored super fund

Coverage Part 2 Employment

Practices Liability

Employment Practices Liability

claims brought against the

Company/Entity

Coverage Part 3 Statutory Liability

Statutory Liability claims brought

against Company/Entity

Coverage Part 4 Company Liability

Covers third party claims –

defence costs & compensation

Breach of Contract Defence

Costs $100k

Crime Loss $250k

Identity Theft $100k

Internet Liability $100k

Tax Audit Costs $250k

Coverage Parts

BUSINESS PROTECTION MANAGEMENT LIABILITY Risk Appetite

BUSINESS PROTECTION MANAGEMENT LIABILITY

Construction (builders, project

managers, property developers)

Mining risks Transport risks

Financial risks (financial planners)

Publicly listed companies

Lawyers / Solicitors / Barristers /Law

Societies

Unions & Protest Lobby Groups

Trusts

(where no corporate trustee)

Financially distressed companies

Local Government entities

Start ups Strata’s

Decline Risks

BUSINESS PROTECTION MANAGEMENT LIABILITY

Full lifecycle process

Real time response, no ARNs

Targeted question base

Multiple limit options

Dedicated Connect team, specialised

U/W

No manual propositions,

uploading, scanning, closings

Straightforward to use

Transacting via CGU Connect Management Liability

Choose your own commission up to

30%

Improved response times

A well-known and respected

Australian brand

Broad cover and competitive premiums

BPML Product

Specialist in-house claims team

Tax Audit automatically

covered $250k sub-limit

Crime and Internet Liability

automatically covered

Pollution cover is automatic under

D&O and Statutory Liability

Statutory Liability for entity is sub-

limited to $2m or the LOI which is less

Stat Liability sub-limit for Directors &

Officers is $1m or the LOI whichever

is less

Benefits & Selling Points

POLL QUESTION 1

CGU CONNECT MANAGEMENT LIABILITY

CGU Connect Management Liability is designed to deliver an e-Commerce solution for Management Liability Insurance that will allow CGU to compete more effectively with other major insurers in the SME Management Liability market. The introduction of this system : Provides a quick and easy distribution channel for intermediaries Is a solution that intermediaries can use to quote and bind Management Liability in real time

through the Sunrise Channel Is a solution that can be utilised throughout the policy lifecycle Reduces admin and costs of doing business

CGU CONNECT MANAGEMENT LIABILITY

•All questions to be completed – then referred

Landing Page

CGU CONNECT MANAGEMENT LIABILITY General Information Page

• Triggers for:

• Annual Gross t/o is greater than $10m

• ‘Overseas’ for the Percentage split of t/o by state/territory

• FTE > 99

• Various Entity Types for which BPML cannot be written

CGU CONNECT MANAGEMENT LIABILITY

• Fixed excesses

• Commission adjustments

• Quick Premium = Combined Cover only.

• Aggregate Limit of Indemnity up to $10m under Combined coverage

Quick Premium Page

CGU CONNECT MANAGEMENT LIABILITY

• Separate coverage requires minimum of 2 coverage types

• Numerous referral triggers • Retrenchment considerations

Coverage Type Page

CGU CONNECT MANAGEMENT LIABILITY

• A referral will be triggered if YES is answered to any question

Claims Information Page

CGU CONNECT MANAGEMENT LIABILITY

• BPML has the concept of minimum premium • Premium breakdown is displayed • If a referral has been triggered the Premium screen will not show a premium

Premium Page

CGU CONNECT MANAGEMENT LIABILITY

• CGU will now ask for Intermediary Details at all times • Broker comments are posted to the i90 Blackboard (similar to PI Connect)

Declaration Page

POLL QUESTION 2

BUSINESS PROTECTION MANAGEMENT LIABILITY Support collateral

BUSINESS PROTECTION MANAGEMENT LIABILITY

CGU is currently piloting a Cyber Liability offering

2 different offerings will be made available

- CGU Cyber Defence (stand alone offering)

- Cyber Extension Cover (for qualifying PI & ICT policies)

The offering will be made available to the market after successful completion of the pilot

Cyber Update

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KEY CONTACTS

Professional Risk VIC & TAS Branch:

E: CGUPRIVICUnderwriting@cgu.com.au

Connect Team:

Professional Indemnity Business Protection Management Liability

T: 1800 128 376 and Option 1 T: 1800 128 376 and Option 2

E: CGUPIConnect@cgu.com.au E: BusinessProtectionML@cgu.com.au

QUESTIONS

POLL QUESTIONS

Q1: On a scale of 1 to 5, 1 being very little and 5 being large, what appetite does

your company have for Management Liability cover?

Q2: How likely are you to promote the CGU Connect Management Liability

product to your customers? On a scale of 1 to 10, 1 being very unlikely and 10 be

extremely likely Scale 1 to 10

POST WEBINAR

Q1: Did you find this webinar to be informative for your educational needs? Rate

from 1 to 10. 1 being not very useful to 10 being extremely useful.

Q2: What else would you like to hear more about from CGU Insurance? Free-form field