Case Study: Management Liability Coverage for Oil & Gas Company

Background

An oil and gas exploration company with $45 million in revenue operates across Colorado, Texas, and Oklahoma, specializing in downhole exploration. The company sought comprehensive insurance coverage to manage the risks associated with its management team, particularly given the complexities of the oil and gas industry.

Challenges

• The financial condition of the company was negative and deteriorating.
• A large percentage of their shareholder base was not on the board or officers of the company.
• The company has a history of EPL claims.
• The current direct market (incumbent carrier) was non-renewing due to prior claims and financial exposure.
• The insured needed to find a carrier to continue coverage for their board and officers.
• The renewal date was less than 2 weeks out.

Solution

After intense negotiations within the wholesale and London marketplace, the wholesale broker was able to secure a management liability package with a $5M limit for each line of business—Directors’ & Officers’ liability, fiduciary, employment practices liability, and crime—ensuring that the limits were not shared between the different policies. The retention for all lines was set at $25K, except for EPL, which carried a $50K retention due to the heightened risks of prior claims history.

Our brokerage team worked around the clock and after multiple declinations, they were able to work with a carrier that understood the complex risk profile of this particular insured. After an extensive back and forth, the broker was able to negotiate a very competitive premium across all coverage lines, along with the necessary coverages needed to properly protect the board and the officers.

Result

The client gained solid protection for their management-related risks, ensuring each policy line was tailored to their specific exposures. The separate limits provided a high degree of protection without compromising any single area of coverage, and the competitive premium helped the retail agent deliver significant value to the client when they were at jeopardy of not finding a renewal solution. This comprehensive approach ensured the client's business operations in Colorado, Texas, and Oklahoma were well protected against both internal and external risks.

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The successful placement of this coverage helped the retail agent secure the business and strengthen their relationship with the client by delivering a tailored and cost-effective solution.

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