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Case Study : Large Public Authority
When we first took over the directors and officers program for this municipal client, we did a complete policy review and then targeted improvements in specific, previously neglected areas. Major targets included revising the language regarding issuance of securities (bonds) exclusions and changes to the “hammer clause.” A hammer clause indicates how the client and the carrier share defense and indemnity costs. In 2009, we moved from a 50/50 hammer to a 70/30. Since then the hammer has been removed and the carrier covers all defense and indemnity costs, while retaining “consent to settle” language. We also targeted adding “side A” limit, which is coverage that reimburses direct legal defense costs of individual directors and officers. Our limit review recommended that out client raise their limit for $2 million to $5 million and we were able to do this without a change in premium. In the following year, we were able to halve the client’s retention (deductible) for no added charge. While we worked hard to obtain these changes, these results are also highly dependent on market conditions and previous losses and can therefore not be guaranteed. These changes do highlight our competence and abilities in this coverage area.