Directors and Officers Liability Insurance

By Max Ali

Directors and Officers Liability Insurance (often called D&O ) is liability insurance payable to the directors and officers of a company, or to the organization(s) itself. Most D&O policies will cover damages or defense costs in the event they suffer such losses as a result of a lawsuit for alleged wrongful acts while acting in their capacity as directors and officers for the organization. Such coverage can extend to defense costs arising out of regulatory investigations/trials as well; in fact, often civil and criminal actions are brought against directors/officers simultaneously. It has become closely associated with broader management liability insurance, which covers liabilities of the corporation as well as the personal liabilities for the directors and officers of the corporation.
Directors and Officers (D&O) liability insurance is purchased by companies to shield the personal assets of the Directors and Officers against claims from:
Competitors
Shareholders
Current or ex-employees
Corporate fraud
Statutory suits
The corporate landscape in Canada has often been characterized as one dominated by small and medium enterprises (SEM). According to Statistics Canada, there are 2.3 million SME's in Canada who employ 2/3 Canadians and account for about 60% all new jobs created in the private sector. It is clear that SME'S are a vital part of Canada's economy yet a majority are without any form of management protection otherwise know as Directors and Officers insurance. In a survey released in September 2008 by Chubb Insurance, 63% of private companies did not have any type of Directors and Officers Liability. The survey went on to breakdown what types of lawsuits these companies faced.
29% from employees
5% from competitors
6% from vendors
16% from clients
44% from shareholders.
The average cost to Canadian companies was $ 338,699 taking into account judgements, settlements, fines and legal fees. In Ontario, bill 189 has made it easier for shareholders to sue companies along with their Directors and Officers.
Charities and Non Profit Organizations (NPO's) are also a relatively untapped market in Canada when it comes to Directors and officers Insurance. There are more than 160,000 NPO's in Canada. As important as charities are, recent scandals have tarnished their image and opened the door to increased litigation against the Board of Directors. Charities and their Boards are now regularly being held accountable for:
Misuse of funds
Conduct of fundraising activities
Wrongful dismissal
Sexual harassment
Insolvency
In today's economic climate, NPO's are faced with diminishing levels of financial support, stricter rules and regulations and an increasingly savvy public making sure their donations are used to the maximum and best use. As corporate D/O has reached its saturation point, insurers are looking at targeting NPO's and SEM's. Simpler applications, lower premiums and packaged policies are now surfacing throughout Canada.
New markets entering this class of business are willing to reduce rates substantially to secure accounts with Canada's leading businesses and organizations. The D/O product is an excellent coverage to help fill the needs of these organizations and also presents an excellent opportunity to build closer relationships with business owners, CEO's & CFO's.
Market segmentation and the growth of niche insurers looks to continue upward as standard carriers continue to decline in numbers, tightening their focus on personal lines. Niche opportunities exist in both personal and commercial lines. Aligning with flexible niche insurers, brokers and MGA's can offer a wide range and various combinations of services, and continue to create successful programs.

How to Calculate PMI

By Linda Clayton

PMI (private mortgage insurance) is one of the many products of insurance companies for mortgage lenders. It is designed to protect them from borrowers who will default in their payments. The law requires that when the down payment on a home is less than 20% of the value of the home, the borrower takes out a Private Mortgage Insurance.
When you want to calculate your exact PMI balance, you will need your principal balance, the PMI rate, the recent home appraisal and the amortization schedule. The appraisal of your home will give you the current market value of your property. You will need to determine the loan to value ratio of your (LTV) first. For this, you will need the remaining balance you owe the mortgage lender. This value will be divided by the appraised value of your home and the percentage you get is your loan to value ratio.
If the percentage of your LTV is more than 80%, you need to look at the corresponding rate according to your lender. There are different rates for different loan-to-value ratios and these rates vary from one lender to the other. All lenders have a PMI chart, and will have corresponding rates according to their charts.
Second, you need to determine how much you will pay your lender every year. This is simple, just multiply the value of mortgage you pay per month by the number of months remaining for you to pay. When you have this balance, multiply it by the rate of your PMI. Using the PMI chart of your lender, you will have already determined the rate of your PMI. Once you have the figures, you will divide it by twelve months, which will determine the monthly premium you will have to pay to the insurance company every year.
The function of your amortization schedule in all this is to help you know then your LTV will drop to a value below 80%. When this happens, you do not have any need to pay PMI and you can save the money for other purposes. When you are sure the rate has dropped below 80%, you're your lender yourself and ensure that it has been removed. Most people are paying the PMI rates out of their own ignorance. Ensure that you have the most recent appraisal of your home. Do not use one that has expired. You will have an advantage if your home has increased in value over time since it will reduce the LTV ratio on your home and get you below the 80% which will then justify your non-payment of the PMI.

The Basics Of Insurance

By Winston Kuwada

When you get that bill in the mail every month for whatever kind of insurance you've got to pay, most people groan and grumble. After all, most people never use their insurance, so paying for something every month without seeming to get anything in return seems like a waste of money. But the truth is that insurance is an essential part of society.

When you buy insurance, you are mitigating risk. Whenever you do anything in life, there are risks involved. When you walk down the stairs, you might fall. When you drive your car, you might crash. If you own a home, there may be some kind of an accident and the house will burn down.
When these things happen, they will generally come with an incredibly high price. And most people don't have that kind of cash lying around. That's where insurance comes in. Insurance is designed to pay for these things if they happen.

And the good news is that if you do have to use insurance to pay for something, such as a house that has been damaged by fire, or if you happen to total your car, the amount you will receive to pay for the damage will generally be much more than the amount you've paid into insurance.
How can this be possible? How do insurance companies stay in business? It is based on something called the "Law Of Large Numbers." This means that the larger the number of people, (or houses or cars) the more accurately the insurance companies can predict how many incidents will happen in a year.

They they can calculate how much it will cost to pay for all these incidents. After adding in their operating costs, they divide this number by the total people participating in the insurance plan. It's a little bit more complicated than this, but this is the general idea.
This way, everybody pays a little bit of money, and is in turn protected against any potential damage that may happen down the road. This is why insurance is so important.

If it wasn't for insurance, people would be exposed to large financial risks. Without a way to handle these risks, this would have an adverse affect on society in general. That's why in many states, it is required to have car insurance in order to drive. Also, if you get a mortgage for a house, you are required to buy fire insurance.