What is it?

Directors & Officers (D&O) Insurance protects all past, present, and future Directors, Officers, board members, trustees, senior managers and executives, and other business leaders if they’re personally sued for any actual or alleged wrongful acts in managing a company. In the event of a claim, D&O Insurance will protect your personal and corporate assets by covering the cost of legal defence fees, witness and court costs, and any settlements on behalf of a business leader.

Program highlights include:

• Coverage for claims of poor governance, failure to act, management errors, misallocation of funds, misrepresentation to shareholders, operational failures, statutory liabilities, regulatory non-compliance, and more;
• Side A Coverage: Personal Asset Protection to reimburse individual Directors and Officers for losses the organization isn’t legally or financially able to cover;
• Side B Coverage: Balance Sheet Protection to reimburse organizations for expenses incurred when defending Directors and Officers;
• Side C Coverage: Entity Protection to protect your firm for any claims related to traded securities;
• Employment Practices Liability (EPL) Insurance: Protects Directors and Officers from claims made against them by staff, such as discrimination, harassment, wrongful termination, failure to hire, and more.

Why do we recommend it?

As the leader of an alternative lending institution, you’re under a harsh spotlight from clients, shareholders, creditors, regulators, and a variety of other key stakeholders. With rising calls for corporate accountability, even a single mistake or lapse in judgement could lead to a lawsuit for tax liability, not setting up a fund or entity up properly, or a financial loss.

And unfortunately, the consequences for Directors and Officers facing allegations of mismanagement are severe, especially those sitting on any boards of mortgage investments (i.e. MIC, LPs, etc.). Both your corporate and personal assets can be at stake—and your company won’t always be able to reimburse your losses. With a comprehensive D&O policy, you can protect yourself and any other business owners, shareholders, investors, and employees from exposure.

Custom D&O Policies for Alternative Mortgage Lenders

ALTERNATIVE MORTGAGE LENDERS D&O INSURANCE:

While D&O Insurance is a critical coverage for all lending institutions, not all policies are created equal. A standard policy won’t protect your firm from some of the most common risks you face as an Alternative Mortgage Lender. In fact, most standard D&O policies exclude claims related to breach of contract, changing the disbursement of dividends, issuing a security and more.

Fortunately, PROLINK has access to a comprehensive Directors & Officers Insurance policy that’s custom-tailored for Alternative Mortgage Lenders. In addition to the standard D&O Insurance coverages, PROLINK’s program will cover your Mortgage Fund, as well as your exposure as a Mortgage Fund Manager, including:

• Breach of duty as a Director or Officer related to the issuance or purchase of securities (i.e. units of the Mortgage Fund);
• Allegations of misleading statements or misrepresentations related to the issuance of dividends;
• Allegations of misrepresentation in the offering memorandum or participation agreements;
• Failure to disclose material facts that could lead to the financial impairment of the Mortgage Fund or Fund Manager;
• Misrepresentation of warranties provided to purchasers during the acquisition of a covered entity.

MORTGAGE FUND MANAGEMENT D&O COVERAGE:

As an Alternative Mortgage Lender, you may also 1) be registered as an exempt market dealer (EMD) under your provincial securities commission or 2) provide mortgage fund management services. Unfortunately, EMDs face significant exposure from investors while dealing any securities or investment funds (i.e. poor advice), while Mortgage Fund Managers face a high risk of borrower claims related to lending services, loan services, and non-performing loan services, such as enforcing or disposing of a loan in default and related assets.

However, the regulatory Errors & Omissions coverage required for Mortgage Brokers and/or Mortgage Administrators will not respond to the above types of errors, omissions, or negligence, leaving you and your organization liable for a significant sum out-of-pocket.

For maximum protection, PROLINK also offers a comprehensive Mortgage Fund Management D&O Insurance policy that’s geared to your specific business operations and the professional services you offer as an Exempt Market Dealer or a Mortgage Fund Manager. Our policy is fully integrated with no coverage gaps and includes Errors & Omissions protection for EMD services, mortgage underwriting services, and mortgage lending services.

Additionally, PROLINK’s Mortgage Fund Management D&O policy is a cost effective way for Mortgage Lenders to meet regulatory requirements for lender registration by getting two coverages for the price of one. In fact, it’s now mandatory for all Mortgage Lenders in Nova Scotia to carry Errors & Omissions Insurance, which can currently only be obtained through the Fund Management D&O combined policy.

What is it?

Mortgage Impairment Insurance provides protection for mortgage lenders (i.e. a private lender, investor, mortgagee) if a property is uninsured and sustains physical loss or damage. If a lender believed a property was insured at the time of the loss, but later found out that there was either no valid policy in place or that the policy did not provide sufficient coverage, Mortgage Impairment Insurance would protect their mortgage interests and offset any financial impact.

Highlights include:

• Protects the entire mortgage portfolio managed by the lender or mortgage administrator;
• Protects the private lender’s mortgage interest against physical loss or damage from uninsured perils (i.e. flood, fire, sewer back-up, vandalism);
• Covers commercial and residential properties across Canada, including both vacant and occupied properties;
• Primary Property Insurance prior and subsequent to the title passing to the lender for properties that do not have an existing policy in place, inadequate insurance, or no evidence of insurance from the mortgagor;
• Optional Premises Liability Coverage for repossessed (e.g. Power of Sale or Foreclosure) and high-risk properties, such as homes under construction, vacant properties, boarding houses, and multi-family dwellings.

Why do you need it?

There are numerous scenarios where Mortgage Impairment Insurance is crucial for lenders. For example, when a property is subject to a Power of Sale, the lender assumes a crucial role as the mortgagee in possession. With this responsibility comes the potential for liability related to the property. If there was a break-in at a vacant property or an injury during a real estate showing, the affected party may look to the mortgagee in possession for compensation. It is important for the lender to have the proper protections in place to safeguard against such scenarios.

In the past, only the largest banks and trust companies in Canada could access this coverage at affordable rates. Now, mortgage administrators, individual private lenders, mortgage funds, and mortgage investment corporations can all purchase through PROLINK at exclusive rates to protect their assets.

An additional benefit? The cost of adding a property to your Mortgage Impairment policy for primary coverage is generally more cost-effective than taking out a standalone Property Insurance policy. As a result, you might be able to offset policy costs, or even use the policy as a small profit centre by charging back on mortgages when the primary coverage is required.

Obtaining this policy through PROLINK will also reduce the time you spend administering home and condo insurance for individual properties. Once purchased, you can simply provide us with a quarterly list of properties that require primary insurance instead of applying for coverage on a case-by-case basis.

What is it?

Cyber Insurance protects your business and offsets your losses in the event of a breach, like if your company’s information is stolen or exposed by a hacker, or accidentally released by an employee. This policy typically includes the following coverages:

• Legal coaching on how to handle the breach with privacy regulators;
• Funds for credit monitoring and client notification costs;
• Funds for court-awarded damages and legal fees in case of a civil suit; and
• Public relations services to manage any reputational fallout from the breach.

Highlights Include:

• Coverage for First Party Liability Expenses–when a breach happens at your own business. The policy will provide coverage for expenses associated with: Event Support Services, Crisis Management Expenses, Network Business Interruption, Digital Asset Restoration, Network Extortion/Ransomware, Cyber Crime, Computer Replacement, and Business Interruption.
• Coverage for Third Party Expenses in the event that you’re sued by a third party whose data was compromised in the breach. This includes costs associated with Privacy Regulation Penalties, Multimedia Liability, Payment Card Industry Fines and Penalties, and more.

Why do we recommend it?

Financial Services firms are among the top targets for cybercriminals. Why? You either have the type of personal information that cybercriminals crave, or you’re a gateway to it. Mortgage Brokers, Lenders, and Administrators also have an especially high exposure due to the banking information you collect from borrowers and investors and your connections to larger third-party vendors, such as credit agencies and mortgage application providers (like the Mortgage Office and Mortgage Automator).

A breach is all but inevitable; it’s just a matter of how soon it happens. Without proper security, you risk losing permanent access to mission-critical data. Plus, if you’re found negligent in the event of a breach, Canadian Privacy Regulators could fine you up to $100,000 per violation. Then there are indirect costs, like client notification, investigation, business interruption, and legal fees. In fact, the average cost per lost or stolen record in your industry is $520. If you have even 100 clients, that means you’ll be out a minimum of $52,000 in breach expenses.

Even worse? Diminished goodwill and reputational harm from the breach might even do more harm than remediation costs, especially if you don’t take swift action or notify breach victims right away. Once you’ve lost that trust, it won’t be easy to regain, or attract new clients, employees, or even investors.

That’s where Cyber Insurance comes in. With a comprehensive policy, you can protect your company from financial loss and get ahead of a breach without losing business momentum or taking a massive reputational hit. Learn more by visiting our Cyber Toolkit below.

What is it?

A Financial Institution Bond protects your business and clients against losses caused by the dishonest or fraudulent acts of an employee, such as embezzlement, forgery, misappropriation of funds, and more. In addition to consumer and balance sheet protection, this type of bond acts as a financial guarantee to regulators for the assets and investments held by a financial institution.

PROLINK’s Financial Institution Bond program also covers Social Engineering Fraud, in which hackers manipulate employees into voluntarily disclosing private information. Hackers typically use email, text, or other forms of communication to impersonate high-ranking executives or other key personnel and demand immediate action, such as confirming financial details, providing payment instructions, or even transferring funds. If employees aren’t aware, they could inadvertently leak data or compromise your entire network, leading to regulatory compliance violations, as well as major financial, legal, and reputational harm.

Social Engineering Fraud is generally included under most Cyber Insurance policies; however, depending on your current cybersecurity controls and the industries you serve, insurers may opt to decline or exclude this coverage for those working in the financial space given the high likelihood or attack.

Program highlights include:

• Complies with all requirements under National Instruments 31-103 for firms registered as either Investment Fund Managers, Restricted Portfolio Managers, or Exempt Market Dealers;
• Complies with all relevant Provincial Securities Commissions and Regulators;
• Can endorse multiple entities under one bond;
  • Even though you may be an exempt market dealer (EMD), your EMD entity may not have access to investor or fund assets. The provincial securities regulators only require that the EMD carry this policy; however, we can extend this policy to your Fund Manager entity, in order to provide more meaningful Employee Fraud coverage.
• Simple application process: members can benefit from a quick turnaround from an insurance broker who understands your business.

Why do we recommend it?

If you provide EMD services, all provincial securities regulators require you to carry a minimum Financial Institution Bond of $200k or 1% of the total assets you have access to if they reach over $20M. But even if you don’t provide EMD services, a Financial Institution Bond is still critical to protect against insider actions, both intentional and unintentional.

Most business owners tend to focus on external threats, but the reality is that internal fraudsters, especially trusted employees, can often go unnoticed since they know exactly where sensitive information is located, how much it’s worth, and how to bypass security measures. The bottom line? Even the most well-managed companies are susceptible to workplace fraud and any financial services firm that has employees handling confidential information should consider this coverage as a standard part of their risk management strategy.

Additionally, with cybercrime at an all-time high, a Financial Institution Bond can help you mitigate the impacts of human error. Social engineering scams and phishing emails have become incredibly sophisticated and convincing; even your most vigilant employees could accidentally divulge their login credentials or other confidential information, especially if they’re distracted or working quickly. Social Engineering Fraud coverage can supplement your existing Cyber Insurance to protect you more comprehensively, offset financial loss, and ensure data loss doesn’t destroy your reputation.

What is it?

Mortgage Broker & Administrator Errors & Omissions (E&O) Insurance protects you and your firm from any allegations of errors, omissions, or negligence committed within the scope of your professional activities. It’ll cover your damages—legal expenses, administrative costs, and court settlements—EVEN if the claims made against you are groundless.

Program highlights include:

A) Errors and Omissions Liability Coverage:

• Flexible amounts of coverage ranging from $500,000 to $5,000,000 per loss;
• Protection for mortgages arranged with Private, Alternative, and Institutional Lenders;
• Coverage for mortgage administration services;
• Full prior acts coverage for the brokerage. The policy will cover services rendered by all associates since the inception of the brokerage. All agents and employees are automatically covered under the policy;
• Legal Expenses reimbursement for Regulatory Disciplinary investigations and hearings;
• No deductible if no damages are paid to the third party claiming against you;
• Canada-wide coverage for brokerages licensed in any province and regulator-approved in provinces where E&O insurance is mandatory;
• PROLINK’s policy is approved by every provincial regulatory authority for mortgage brokers and administrators.

B) Legal Expense Insurance (included with E&O Plus):

Legal representation is expensive. Between lawyers’ fees, court fees, settlements, and more, the cost of an unexpected lawsuit can add up pretty quickly. And costly litigation won’t just chip away at your business’s bottom line; it’ll also trust and goodwill you’ve worked so hard to build.

That’s why PROLINK is partnering with ARAG Canada to offer a comprehensive, cost-effective Legal Protection Service, automatically included with your Professional Liability Insurance. Your Legal Protection Service now includes access to:

• Legal Expense Insurance up to your limit of coverage, including coverage for legal representation;
• Professional legal counsel through an unlimited telephone service, available seven days a week from licensed lawyers;
• A secure, online Legal Document Portal, with free access to 100+ legal templates and a guided document builder;
• And more!

Why do we recommend it?

Depending on where you lend and the professional services you offer, you may be required to register as a Mortgage Broker/Brokerage or Administrator in certain provinces and carry regulator-approved Errors & Omissions Insurance by a regulatory body, like in Alberta, Ontario, or Nova Scotia .

But whether or not it’s a requirement, there are countless reasons all Mortgage Professionals should at least consider Errors & Omissions Insurance. After all, the real estate market is ever-evolving, even in times of prosperity. And when people’s savings are in question, tensions can run high, especially if your client thinks you’ve done something to damage them financially or misrepresented their interests. Even if you’ve worked to the best of your knowledge and ability—even if you’ve done nothing wrong—your advice or actions might be misinterpreted and you could face a lawsuit. Having Errors & Omissions Insurance will allow you to respond quickly and effectively and ensure that a frivolous claim won’t jeopardize your business or your reputation.

To be clear, while PROLINK’s Errors & Omissions Insurance program includes the services you provide a mortgage brokerage or administration firm, it won’t cover your risks as an Alternative Mortgage Lender. Why? Alternative Mortgage Lenders have more flexible guidelines for mortgage approval than big banks and require specialized coverage to protect against a higher level of exposure from borrowers that might not meet the criteria for a traditional mortgage. Because the risk is so high, lenders are also required to carry E&O Insurance in some jurisdictions, like Nova Scotia.

Alternative Mortgage Lenders can obtain Errors & Omissions coverage through PROLINK’s comprehensive Mortgage Fund Directors & Officers Insurance plan, which is custom-tailored for lending services.

What is it?

Commercial General Liability Insurance (CGL) will protect your firm from third-party claims of bodily injury, property damage, and reputational harm caused by your professional activities or business operations.

Why do we recommend it?

CGL Insurance will protect you from common risks that all businesses face regardless of size, trade, or industry. Whether your firm is large or small, online or on the ground, you could be liable if any kind of damage or injury to a client, vendor, supplier, or other third-party is traced back to you or staff. You’re particularly vulnerable if you or your employees:

• Own, rent, or lease a commercial space that’s open to the public;
• Have a home-based business where clients visit you;
• Visit your client’s workspace or home, or conduct business anywhere else offsite; and
• Advertise or create marketing materials for your products, or services.

What is it?

Property Insurance protects your commercial property from damage or loss and will cover the costs of repairs or replacement for contents, equipment, and furnishings.

Why do we recommend it?

Property Insurance is vital if you have your own business, regardless of the location. Whether you work from home or out of a commercial office, your general liability or homeowner’s policies won’t reimburse you for any damage to your business assets following a break-in, fire, or other disaster. And without proper coverage, the impact of repair and replacement costs could be financially devastating, especially if you lose any valuable equipment, files, or key documents that are necessary for operations.

Property Insurance can help you safeguard the investment that you’ve poured into your office, as well as meet any landlord or property manager lease requirements. We’ll also make adjustments to your coverage as your business continues to grow so you’re protected no matter what.

What is it?

Employment Practices Liability (EPL) Insurance protects your business from claims made against you by employees, such as wrongful termination, discrimination, harassment, and more.

Why do we recommend it?

As a business leader, you know how aggressive clients can be—but employees can be equally as unpredictable. No matter how much you trust your team, even if you hand picked them yourself, you might just be one close call away from an allegation that could affect your reputation as a fair employer. And these days, it’s not hard to get the Ministry of Labour involved and suddenly, you’re out thousands of dollars in legal fees and lost business. With an EPL policy, you’ll be protected against any employee allegations that may arise throughout the course of work (subject to the terms of your policy).

What is it?

Our Group Health & Dental Benefits offer fully customizable Health, Dental, and Drug plans for you and your employees at competitive rates. Plan features may include (but are not limited to):

• Extended healthcare, including drug and dental coverage;
• Life Insurance;
• Long-term Disability Insurance;
• Employee assistance plans;
• Health spending accounts;
• And more!

Why do we recommend it?

Any business with employees should consider Group Health & Dental Benefits. After all, the success of any organization relies on the well-being of its people. When employees are healthy—when they feel supported by workforce leaders—businesses are resilient in the face of an uncertain future. That’s why it’s key to protect your employees’ physical, mental, and financial health with a strong benefits package. Our Protect & Perfect risk management approach to group benefits can align your firm with a comprehensive program that reflects your staff’s needs, business challenges, and financial goals.