Why Dragonshield Regulatory Excess X2?
It has long been considered in the insurance brokerage community that the excess market is simply a play on cheap capacity with no innovation. All forms are considered equal and therefore the cheapest premium wins. This approach, however, can leave Insureds dangerously exposed. If a trade-off has been made for price over coverage at the primary level, cheap follow-form XS coverage not only magnifies the impact of any gap, but builds in further fragility as claims are, at best, settled at the pace of the slowest insurer in the tower or, at worst, denied automatically by the entire tower as soon as a single insurer declines.
AIG has developed Dragonshield Regulatory Excess X2, an innovative Excess D&O cover, which adds to its best-in-class Dragonshield D&O product suite and addresses these issues. Dragonshield Regulatory Excess X2 combines AIG’s extensive primary layer claims handling with unique coverage features that introduce a greater degree of robustness to any tower it sits in. In short, Dragonshield Regulatory Excess X2:
1) Provides market leading cover unmatched by our competition (at a premium price);
2) Leverages AIG’s expertise in D&O claims in Asia by providing the insured a regulatory crisis cover add-on to its primary protection along with access to assistance with coverage issues that may arise with other layers in the tower;
3) Rewards the insured with additional cover in the primary policy by doubling the sublimits when AIG is added to the excess tower.
Optional Policy Covers:
1. Doubling of sublimits on the primary where AIG is the sole primary insurer - This coverage is the basis of the X2 name. If AIG is the sole primary insurer and the insured decides to place AIG on the excess program using Dragonshield Regulatory Excess X2 (on any layer), the sublimits on AIG’s primary cover automatically double. For example:
a. The EPLI sublimit is US$1m with AIG the sole* primary insurer. If the insured purchases the Dragonshield Regulatory Excess X2, the EPLI sublimit automatically doubles to US$2m.
b. Any erosion of the doubled sublimit on the primary will not erode the excess Dragonshield Regulatory X2 policy.
*If AIG is not the sole lead primary market the doubling of the sublimits does not apply
2. Second Opinion Cover – Where AIG is on an excess layer using Dragonshield Regulatory Excess X2 and AIG has agreed cover for a claim(s), which differs from the position taken from any other insurer (on any excess layer in the tower above or below AIG), then the Insured can utilize a separate sub-limit of US$50k (in addition AIG’s XS limit) to engage legal counsel to provide advice to assist in coverage discussions with those other insurers.
Regulatory Crisis Cover Fill-in (DIC) – With decades of primary claims experience, AIG is often seen as the best option for the insured on their primary D&O coverage. With Dragonshield Regulatory Excess X2, the Insured can ‘buy-in’ a key element of this primary cover (and unique experience) by introducing AIG as an insurer onto its XS layers. Dragonshield Regulatory Excess X2 offers a separate and additional sub-limit of US$50k for use as an emergency funding limit for pre-investigation costs that may not be covered by the primary policy. This positions AIG’s excess cover to provide immediate assistance to the Insured in the event of a regulatory crisis (even though it sits XS). As up to 90% of costs in Asia are related to regulatory exposure, having access to AIG’s claims team and legal partners on-call when a regulatory crisis event happens, provides our clients with comfort to handle potential investigations by regulatory bodies. The cover provided is base form regulatory crisis cover in the Dragonshield D&O 2015 primary policy. If this cover is no broader than the primary policy then cover will apply as excess of the primary policy sublimit (should it be eroded).