In a recent survey of 20 members of NVCA who purchased through the VentureInsure program:
- The average savings was 18%; with the largest savings being 50%.
- Coverage terms were improved for each insured. Example: the removal of an exclusion that blocked coverage for a limited partners’ role as an advisor on a portfolio company’s sale.
Portfolio Companies of NVCA member firms also benefit from the full service capability of TechAssure member brokers. With over 4,000 companies insured in the Technology, Life Sciences, and Digital Media industries, TechAssure members have a depth of experience and expertise unmatched in the industry.
Quotes and success stories:
- “I have been very impressed with the depth and breadth of (TechAssure member) offerings and their high level of professionalism. They were able to identify potential holes in our coverage in addition to potential cost savings. With so many would-be business partners out there, it’s great to have the NVCA stamp of approval to identify top tier vendors, these guys have been a great resource for in the short time I’ve been working with them” – Tara Farnsworth, former CFO / Focus Ventures
- A TechAssure member was introduced to a portfolio company by a managing partner from their VC firm. The CFO at the company had a long relationship with a large broker and completely trusted them, however, agreed to a review of the D&O policy. This review revealed that there was an absolute exclusion for products liability. The company manufactures a complex organ care product, as such their entire business IS their product. With this exclusion on their D&O policy, there basically was no coverage in the D&O policy sold to them, as it excluded claims arising from their business (the product). The client was under the belief that his products liability would cover this, but the TechAssure broker educated him on the fact that a products liability policy provides coverage for bodily injury and property damage, not pure financial injury resulting from mismanagement (that’s D&O). The TechAssure broker provided quotes using the NVCA portfolio company management liability program and was able to develop far superior coverage for less cost. The CFO promptly dismissed the other long-time broker for failing to identify such a coverage gap and awarded the entire account to the TechAssure broker.
- A company was US domiciled but most of the operations were in Switzerland. Their D&O insurance was placed by a very large broker with one of the three largest insurers in the world. This was a public company that had recently privatized and the broker team seemed to lose interest with the change. The coverage was not amended after the go private transaction. It didn’t even provide entity coverage and had major shareholder exclusions and professional exclusions, etc. It cost over US$200,000 a year. The TA broker was able to immediately (less than two weeks) cut the premium in half. Coverage was then offered through the VentureInsure portfolio company program and the pricing dropped to US$33,000! Coverage gaps were eliminated and significant improvements made. The VC now refers all their business to this TechAssure member.
- A portfolio company of an NVCA member VC purchased a General Liability policy through a generalist broker – a golfing buddy of the CEO. They paid $225,000 a year for the policy from a top ten carrier. The premium was high (the portfolio company was only $27 million in annual revenue) because the company’s product for the Dept. of Defense “looked scary” to the underwriter. To add insult to injury, the GL policy contained a Products Exclusion and a Professional Liability exclusion (even though the underwriter had still charged a premium as if there was full products coverage). A TechAssure member was referred in by the contractors accountants and reviewed the policy and within 48 hours had a quote from another top ten carrier for $18,000 a year with full Products coverage.
- A venture-funded biotech was asked by its VC to allow a TechAssure member to do a quick review of the insurance program. The incumbent broker was large and had placed the insurance with a major carrier – what could be wrong? The TechAssure broker discovered the Workers’ Compensation was misclassified; the Property exposures were not properly rated; and the main research site had no Business Interruption coverage. The biotech firm switched mid-term and saved 50% overall, while adding coverage for the R&D location.
- An NVCA member purchased VCAP Liability from a generalist broker. The TechAssure member was able to lower their annual premium from $180,000 to $125,000 using the VentureInsure program products. Additionally, the TechAssure member provided a premium allocation for each individual fund as an administrative service. Several gaps in the policy language from the prior form were fixed by the TechAssure member. In 2009, this NVCA member also switched their Package insurance program to the new VentureInsure product and saved an additional 10% on their Property, General Liability, Auto, and Umbrella premiums. Important coverage enhancements for their international exposures were added.
- An NVCA member asked their local TechAssure broker to review the VC’s insurance program, which had been placed through a large, national, broker. The TechAssure member was able to outline 12 coverage deficiencies that exposed the VC to litigation arising from portfolio companies. Using the VentureInsure program insurance products, the TechAssure member was able to close the coverage gaps and provide a savings of 22% savings overall.