How do you know if your broker knows what they’re doing?
How do you know what you don’t even know? I know, last week I promised you I’d walk you through my thoughts on how to know if your broker knows what they’re doing and now, I return, only to propose a different question, but they go hand in hand, so stick with me for a bit.
Choosing the right broker and purchasing the right insurance is a key decision that will protect your firm’s reputation in a myriad of potentially catastrophic loss scenarios, so it’s something worth thinking about. To help you keep your neighbor’s shirts coffee-free and dry-cleaning bill to a minimum, I’ve come up with a four tips that I hope will demystify the insurance purchasing process at venture capital and private equity firms:
- Your insurance is not a commodity. The policies that are most important for venture capital and private equity firms, like general partnership liability and cyber, are also those that are the most highly manuscripted. There is constant change with underwriter appetite and in the legal climate when it comes to these policies, and these are the policies that will cover the largest claims your firm may face. That’s why they require a specialized touch from someone who knows what they’re doing.
- Your policy should be “tweaked” every year. This tip comes as a surprise to a lot of people, but when you consider the change in the legal landscape and how quickly this industry evolves, if you renew your policy and nothing changes from the year before, that should give you pause. With my own clients, I insist that the renewal process begin 120 days out in order to accommodate these changes – look for a broker who thinks about your renewal long before it occurs.
- Be proactive about involving yourself in the insurance purchasing process for both your firm and the companies you invest in. The general partnership liability insurance your firm buys overlaps directly with the D&O insurance at the companies you invest in. Inserting yourself (or your broker) in the policy review or decision-making processes will fill any gaps and make the overall process run more smoothly.
- Don’t let the market decide where you buy your insurance. Don’t try to split the marketplace by assigning insurance companies to multiple brokers – the right broker will do their job, and therefore make your job easier. If your broker is skilled, has market access, and many other clients in this space, they will get the results that you need.
The insurance purchasing process doesn’t have to be confusing – in fact, it shouldn’t be. Through a single point of contact, the significant resources that we bring will ensure expert support from professionals through all phases of the purchasing and service process.