Covering the Business Critical Risk — Key Person Assurance Protection B
Broker Perspective
Stavros Neocleous
stavrs.neocleous@
sjpp.co.uk www.dealassured.com
An interview with Stavros Neocleous Founding Principal Partner St.James’s Place PLC and Managing Director of Deal Assured Limited. By Jason Edwards.
Founding Principal Partner of St. James’s Place PLC and Founder and Managing Director of Deal Assured Limited. I have practiced since 1980, RDR qualified. My team has worked together for almost a quarter of a Century supporting private equity by providing deal critical advice supported with a real-time service on a considerable number of deals. We are easy to instruct and work with enabling you to focus on your deal. Our proposition is the absolute promise of delivering valid Key Person Assurance Protection contracts designed fit for purpose intended.
Key Person Assurance Protection (or Key Man Insurance) is designed to protect a company against the impact of being deprived of the services of a key employee through illness or death. Whilst Key Person Assurance Protection can be purchased as part of a standard insurance programme, the initial catalyst is often an MBO or M&A transaction where the purchaser is motivated, or mandated, to ringfence this exposure within the acquisition target. The decision to purchase Key Person Assurance Protection is frequently taken at a time critical stage in the deal, so the quotation, underwriting and placement process is often under the microscope with speed becoming a critical factor.
JE: Stavros, how do you approach insurance market selection? SN: We constantly review the protection market. Our recommendations are based on a number of key material factors:
n Providers scope and range of benefits and features. n Overall ability to deliver extreme speed of service (not all providers are able to deliver on our deal critical requirements).
n Appetite for type of risk, whole of market capacity (maximum sum assured a provider is able to underwrite on any one individual).
n Unfettered access to senior underwriters providing flexible, in-depth quality underwriting.
n Providers willing to information exchange, (share complicated medical & lifestyle underwriting), perhaps if the deal requires more than one provider, or if the initial provider offers revised terms post underwriting.
n Providers re-assurance options are very useful, and whether there is a survival period (the survival period required post event i.e. heart attack) where specified and critical illness are included.
n Providers who are able to offer competitive premiums, pre and post underwriting.
Other factors we consider are the life assured’s age and general state of health, family history, lifestyle, country of residence especially commercially visited, occupation and industry sector, whether the individual has recognised outstanding abilities. The providers view on financial underwriting, positive claims outlook all contribute to our decision process enabling us to achieve and deliver the very best results.
JE: What are the key considerations for underwriters? SN: Depending on the facts i.e. sum assured, scope and range of benefits and features, clients age, medical history and lifestyle.
There are three core aspects to underwriting, (all eat into valuable time), medical, lifestyle and financial. We always aim to achieve the very best results and outcomes (post) underwriting decisions, whilst obtaining the most competitive premiums, securing the very best benefits and features, terms & conditions for all our deals.
JE: What is the process once you have a completed proposal form? SN: Once we have the completed proposal forms, we immediately begin the underwriting process by submitting the proposals to the respective provider. The provider will request a General Practitioners Reports from the GP to confirm medical history. The choice of preferred provider will determine which of our extended teams will be instructed to contact Management directly to obtain their availability and to coordinate and confirm the appropriate routine medical & lifestyle underwriting requirements (associated tests). Appointments are urgently arranged at a suitably convenient time and accommodated at a top local facility.
44 Author Viewpoint
Risk and Insurance in Private Equity and M&A 2012/13
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