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How Private Companies Can Overcome the Challenges of Increasing Insurance Rates While many private companies do not believe that they need D&O insurance, this can cause a very dangerous outcome.

By Trent Bryson

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

With today's emphasis on corporate transparency and accountability, an organization's directors and officers face countless exposures. Regardless of your company's size or mission, the legal costs associated with a lawsuit can be crippling for both the organization and your directors and officers. Many wrongly assume that directors and officers (D&O) insurance is only necessary for publicly traded companies. However, privately held organizations can just as easily fall victim to lawsuits that can impact the company, its officers, and board, making D&O insurance a must.

Some benefits that D&O insurance can offer to privately held companies:

  • Coverage for manufacturing or production flaws
  • Legal cost reimbursement
  • Coverage for regulatory exposures
  • An improved ability to attract new directors
  • Peace of mind

Related: Get an insurance quote tailored to your needs!

Unfortunately, these days the D&O marketplace has been severely impacted by the COVID environment, causing rate increases, more stringent underwriting, and a decreased capacity in the marketplace. An example is below us after being presented with a $140,000 increase (111%) on a renewal for a $20m D&O policy. We were approached for a second opinion and a last-ditch effort for the insured as the policy was set to expire within 48 hours. If no other options existed, the insured would be forced to reduce their limits to bring their renewal premiums to an affordable level.

Part of the problem was that along with a difficult marketplace, the insured's underperforming financials also played into this large increase. The current broker had collected a renewal application and financials but had no further discussions with the insured before taking the account to market and coming back with a quote.

When Bryson asked the insured what their financial outlook was for the next 12-18 months, the insured noted that they had finished a recent capital raise and a seven-figure sum would be received by the company in the next month. Further discussions revealed an updated business plan for the coming year and data regarding their current investors, of which many were accredited.

The current broker made an egregious error in the renewal process by not collecting relevant data that we knew would make a major difference in marketing efforts. D&O rates hinge greatly on the insured's financial standing and an underwriter's ability to determine how well the company will perform over the life of the policy term.

The solution was to approach the insurance carriers with the full financial outlook of the company, along with a strong relationship with a newer D&O carrier that focuses on private equity-backed businesses and provides aggressive rates based on their faith in the PE firm's due diligence process, this saved the insured over $150,000 on their renewal while providing a full $20m in limits, which had been reduced to $15m on their original renewal quote.

Although the insured was not private equity-backed, we uncovered that this carrier would consider companies with accredited investors. With new, positive financial details and an aggressive carrier willing to consider our risk, we went to work to put a deal together in under 48 hours.


  1. An application and financials do not tell your full story
  2. Partner with a broker who will be your advocate with underwriters and understand D&O insurance specifically
  3. Make sure your broker has strong relationships with carriers who have an innovative outlook

While many private companies do not believe that they need D&O insurance, this can cause a very dangerous outcome. D&O lawsuits can occur without warning and easily reach six figures, draining the personal assets of a company's leadership team.

If you want to learn more about D&O insurance to protect your company and your leadership team, contact Bryson at

Get a business insurance quote tailored to you today!

Trent Bryson

Entrepreneur Leadership Network® VIP

CEO of Bryson

Trent Bryson, CEO of Bryson Financial, has established success as the leader of one of Southern California’s leading insurance brokerage and corporate retirement firms. Bryson’s vision and expertise have led him to receive regional and national awards and recognition, such as City Bank National’s Entrepreneur of the Year.

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