The Importance of Management Liability in an Economic Recession
The U.S. economy has seen better times. Record-high gas prices and 40-year-high inflation have been impacting American families and businesses for months. In July, the U.S. Bureau of Economic Analysis released that the gross domestic product (GDP) contracted by 0.9%. This is the second consecutive quarter of negative GDP growth, which means the U.S. economy is in a recession.
As business owners across the country grapple with current challenges and the challenges ahead, having the right management liability insurance is an important part of any risk management strategy.
In tough economic times, important decisions must be made about expenses, and payroll is often the largest expense in a company’s budget. If reductions in the workforce are necessary, a business should consult with an attorney to conduct a disparate impact analysis to provide an objective review of any layoff to determine whether discrimination is indicated in the decision. An in-force employment practices liability policy will be there to respond to subsequent lawsuits that may arise from such decisions.
Business leaders also face rising costs for supplies and potential increased corporate taxes. At the same time, rising interest rates could make it more difficult to borrow needed capital. The decisions made at this time could expose directors and officers to litigation from shareholders, lenders, vendors and competitors. A directors and officers (D&O) liability insurance policy could provide the protection needed to defend these lawsuits.
Devon Park Specialty’s Management Liability product is designed to address these exposures. The product provides employment practices, D&O and fiduciary liability coverages. It is a duty-to-defend form, which means the insurance carrier must defend the insured from a covered claim, allowing business owners to focus on running their businesses rather than spending time defending against a lawsuit.
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As always, thank you for your support and business.
Contact and written by Stephen Easley
Vice President, Division Leader | 844-438-6775 Ext. 2536