Straight From the Sales Director: What I Need to Know About Buying D&O Insurance
As a board member for a nonprofit, you graciously give your 3T’s (time, talent, and treasure) to the organization in hopes of its success and ability to impact the community. You work diligently trying to drive the organization to a sustainable tomorrow. But did you know that even acting in good faith, you could still be held personally liable for the actions and decisions you make for the organization? As you began to seek out a Directors and Officers (D&O) policy as protection from costly litigations arising from a lawsuit, make sure you are current on insurance market trends. In 2020, we saw historically high premiums as organizations continue to experience record-breaking litigation claims. As a result, according to MST Insurance Solutions, “many nonprofits will experience significant rate increases, fewer markets, lower available limits, more robust underwriting, and higher retentions in 2021.”
• Cyberattacks – According to score.org, 50% of nonprofits worldwide have experienced a ransomware attack. Attackers target nonprofits due to the vast amount of donation or funding data they acquire and their lack of funding to address cybersecurity concerns. Additionally, these costly attacks can lead to a D&O claim as stakeholders allege that leadership didn’t implement a cybersecurity plan.
• Social and Environmental activism continues to influence the D&O market. Movements such as #MeToo and Black Lives Matter have caused organizations to face scrutiny for their lack of equality or diversity in the workplace and alleged or actual sexual misconduct. Organizations of all sizes are at risk; if an employee is visiting a client and expresses to you or management that they experienced sexual harassment and you fail to respond adequately, you could be held liable.
• COVID-19 and a global recession forced many nonprofits to make staff, financial, and overall operation pivots. However, these changes can lead to legal implications as stakeholders claim that leadership inadequately managed the organization’s direction, appropriately respond to the threat, or prepare for economic disruption.
So what’s next
- Examine your organization’s current cybersecurity plan, which should include a cybersecurity checklist, employee security training, a yearly vulnerability assessment, and an incident response plan. If your organization doesn’t have a current program in place, reach out for a free assessment and tools to mitigate these risks.
- Talk with your leadership team to ensure a formal process for documenting complaints about misconduct and reach out for complimentary employee training.
- Give us a call for a complimentary review of your current D&O policy or to request a quote.