How Proper Risk Exposure Policy Prevented Significant Loss

June 24, 2024

At Concertiv, we advocate for our insurance clients to deeply consider risk exposure when selecting policies for their firms. By constructing robust policies that protect against regulatory investigations, shareholder suits, and fraud, we can potentially save our clients millions of dollars. Here are three instances where risk exposure could have led to a significant loss, but thankfully, insurance policies crafted with Concertiv’s expertise shielded these firms, resulting in substantial financial benefits.

Regulatory Investigation (GPL)

Total Insurance Payment: $7.35M in Defense

When a private equity firm faced a Subpoena and a Civil Investigative Order from the Securities and Exchange Commission (SEC), they promptly engaged legal counsel to respond to the SEC’s document request and prepare for potential interviews with the company’s directors and officers. Despite the uncertainty of being the investigation’s focus, the firm’s proactive approach and cooperation demonstrated its dedication to transparency and risk management. Thanks to an expertly crafted insurance policy, they were shielded from significant financial burdens, with $7.35 million covered in defense costs, a testament to Concertiv's unique expertise in shaping comprehensive insurance solutions.

Shareholder Suit (GPL/Portfolio Company D&O)

Total Insurance Payment: $12.5M in Settlement and Defense

Shareholders of an acquired public company accused the acquiring entity of aiding and abetting breaches of fiduciary duty. Despite the serious allegations, the portfolio company and its PE sponsor remained steadfast. Their unwavering commitment to transparency and accountability not only helped foster trust among shareholders but also minimized financial repercussions. The insurance policy, designed with Concertiv's guidance, covered $12.5 million in settlement and defense costs, protecting the firm's financial stability.

Fraudulent Payment Instructions (Cyber)

Total Insurance Payment: $500k Reimbursement Above Deductible

A malicious actor, posing as the firm’s CEO, contacted the accounting department with fraudulent payment instructions, requesting a $600k wire transfer to a fraudulent bank account. The department, unaware of the deceit, executed the wire, resulting in an irretrievable loss of company funds. This incident highlighted the firm's vulnerability and underscored the necessity of robust risk management. Fortunately, the cyber insurance policy, tailored with Concertiv’s expertise, reimbursed the firm $500k above the deductible, mitigating the financial impact of the fraud.

These examples underscore the critical importance of proactive risk management and robust insurance policies. At Concertiv, we specialize in crafting comprehensive insurance solutions tailored to the unique needs of each firm. Our expertise not only helps mitigate risk exposure but also ensures financial protection in the face of unforeseen challenges. By partnering with Concertiv, firms can confidently navigate the complexities of regulatory investigations, shareholder suits, and cyber threats, safeguarding their assets and securing their future.

Remember, the right insurance policy is more than just a safety net—it's a strategic asset that can make a significant difference when risk exposure leads to loss.

Concertiv's Insurance Advisory:

At Concertiv, we believe that smart insurance purchasers should go beyond just considering premium retention. It's crucial to focus on factors such as favorable policy language, appropriate counterparty risk, program structure, and strong broker partnerships. This comprehensive approach ensures that your insurance contract is robust and provides the coverage you need when it matters most.

The true effectiveness of your insurance product is only revealed when a claim is made. Therefore, it's essential to ensure your policy is written as broadly as possible to guarantee maximum protection.

Contact us today to get an independent assessment of your firm's insurance including coverages, coverage limits, carriers, premiums, language, and retention details.