Can a private equity firm help its portfolio companies purchase better D&O insurance?
Yes. We have seen a number of private equity firms work with their own insurance broker to develop a portfolio company D&O insurance program that takes advantage of the private equity firm’s leverage in the D&O insurance marketplace. The way such programs work is as follows. The private equity firm’s insurance broker develops a list of premium D&O policy enhancements that it would like to see any portfolio company have as part of a top quality D&O insurance policy. The broker then approaches the major D&O insurance carriers to determine their interest level in accepting such policy terms. The insurance carriers have a willingness to participate because it allows them to do business with more portfolio companies than they otherwise would have access to. In this type of program, portfolio companies are not required to purchase their D&O insurance from the selected carrier. Rather, the program simply allows the private equity firm to present the program as an option for the portfolio comp
