March 25, 2010 by Daryl-Lynn Carlson
Companies are not purchasing enough liability insurance despite acknowledging losses to such risks as workplace crime or employment-related law suits, a new survey shows.
“Despite a down economy and an increase in risks, private companies may not be purchasing sufficient management liability insurance to help protect their bottom line from a costly liability lawsuit,” Lisa Jones, vice president, Chubb & Son, and private commercial product manager for Chubb Specialty Insurance, says in a summary of the study.
“In addition, companies that are uninsured and experience workplace crimes or an employment practices liability lawsuit, for example, may find that a tight credit market makes it difficult to obtain credit to pay for such a loss or to continue their business operations.”
The insurer’s latest Chubb Private Company Risk Survey of companies in the United States shows 37 per cent did not purchase any type of management or professional liability insurance.
A majority – or 63 per cent – didn’t buy any type of employment practice liability insurance; 66 per cent didn’t purchase crime insurance, another 63 per cent had no directors-and-officers liability insurance and a full 91 per cent didn’t have cyber liability insurance.
Companies that didn’t buy employment practices, directors-and-officers or crime insurance responded that they perceived their risk to losses to be “low”.
Chubb points out that despite the reluctance to purchase insurance, two out of three – or 62 per cent – of U.S. private companies had experienced some type of event related to management or professional liability, wrongful termination or crime exposure in the past five years.
The survey, released last week, also notes that workplace crime and fraud are most likely to happen during an economic downturn and suggests companies revisit their insurance policy purchasing decisions.
This story was originally published by Canadian Insurance Top Broker.