Chewing the fat with DUAL on Management Liability

Partner Talk: DUAL on Management Liability

BizCover for Brokers is lucky enough to be partnered with multiple leading insurers who are happy to share their wealth of knowledge and experience with us and our brokers. We recently sat down with DUAL Australia to talk about Management Liability insurance and help dispel the misconceptions surrounding it.

Let’s just jump right in with a question that’s on many brokers’ and small business owners’ minds: Do SMEs really need Management Liability (ML)?

Short answer: Yes!

DUAL has been insuring SMEs for their ML risks for the last 15 years, and we have seen a wide range of claims come through for ML. This clearly illustrates that all industries can be affected.

An average base premium is around $3,000, which is excellent value considering the day-to-day operational exposures SMEs face and the potentially devastating effects of an uninsured claim.

We’ve found that many SMEs feel like ML isn’t for them, because they aren’t a big corporation. What would you say to help convince them to consider it?

Well, there are three main reasons why SMEs should consider a ML policy:

Firstly, ML claims affect businesses of all sizes. The majority of claims we have seen over 15 years of offering Management Liability are for micro-SMEs where turnover is less than $5m.

Second, ML can protect SMEs from business-critical underinsurance. A large, serious claim like Crime or an Occupation Health & Safety incident investigation can quickly deplete a small business’ savings, leaving them vulnerable to bankruptcy or business closure.

Third, many SMEs might not have the resources to defend themselves in ML matters. We have received almost 7,000 ML claims/circumstances across over 80 different industries, which include multiple claims over $5 million. That’s a lot of money for most small businesses!

If you had a small business, which ML risk would keep you up at night?

Among the largest incurred amounts we experience are Crime claims. In a lot of situations, without the protection of an ML policy the insured would need to cease operations. The perpetrators are often long-standing, trusted employees with the average fraud taking over 5 years to discover. It is essential that SMEs have this sort of cover in place as over 60% of crime cases are not able to access recovery.

Crime claims certainly sound like a big risk for SMEs. Are there other types of claims that SMEs might want to think about when deciding if ML is right for them?

Yes. ML can cover SMEs for a wide range of claim types, including but not limited to Employment Practices Liability (EPL), OH&S and Tax Audit. Some quick stats on each:

EPL claims are the highest frequency we receive and have represented 40% of our ML claims/circumstances.

Sadly, despite the lockdown measures of a pandemic, 182 Australian workers were killed at work in 2020. A ML policy’s OH&S portion can provide cover for the audit, investigation and prosecutions from Safe Work Australia during what is an emotive and sensitive time for all parties involved.

Finally, 1 in 10 businesses will experience a tax audit from the ATO. Do insureds realise a ML policy can extend to cover audits from state body authorities (like the Office of State Revenue) and not just the ATO?

These aren’t the only protections that ML can provide for SMEs, but they are some of the most common, and as you can see, potentially expensive.

Wow, those are some alarming statistics. But let’s end on a more fun note. Our brokers love claims examples. Is there an interesting ML scenario you can share with us?

We see the weird, wonderful and very sad across Crime claims. We have experienced full sub-limit losses for theft of tomatoes, lobsters and expensive yachts. In over 15 years of providing Management Liability nothing ceases to amaze us!

Management Liability for your SME clients

Thank you again to DUAL for taking the time to discuss Management Liability with us!

BizCover for Brokers has an excellent ML offering covering over 2,000 occupations and businesses with up to 200 employees. Plus, you can get quotes for up to 3 ML insurers and receive quotes for  five other products simultaneously, so you can service your SME clients and save time doing it.

Log in to bind your next Management Liability policy today.

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