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2017 Insurance Business Awards Finalist

Risk Balance was launched in early 2016 with the goal of providing service excellence and distinctive expertise within niche industries.

Not yet 2 years into our new venture we are thrilled to have been recognized and to be amongst wonderful organizations selected as finalists for the 2017 Canada Insurance Business Awards.

Although we appreciate how the business insurance industry can benefit from automation and commoditization, we believe there is a demand for personalized service and a deep understanding of client operations, within certain market segments. Our early success re-affirms our approach and we will continue to raise the bar for quality and professionalism.

Thank you for the great recognition and we look forward to celebrating with our industry peers at the awards ceremony at the Liberty Grand in Toronto on November 30th.

Reps & Warranties Insurance - a tool for M&A activity

We are seeing an increasing trend of Representations and Warranties insurance being used as a tool to facilitate mergers or acquisitions.

Reps and Warranties insurance protects both buyers and sellers that are involved in these transactions.

Inaccuracies in representations and warranties made by the seller can result in costly liabilities.

This product can significantly reduce the inherent risk of a transaction (for both buyer and seller) and can help overcome barriers in the negotiation process to help close the deal.

Advantages for Buyers:
  • Allows the buyer to submit a more attractive offer by lowering the escrow requirement
  • Extends the duration of representations and warranties allowing more time to detect and report problems that arise with an acquired business
  • Eases the concern about the buyers ability to collect on the sellers indemnification due to sellers poor financial condition
  • Allows the buyer to recover damages from an insurance policy rather than a former shareholder who may now be a key part of the ongoing management team. 
Advantages for Sellers
  • Reduces the risk of contingent liabilities allowing sellers to lock in their return on investment
  • Distributes all or most of the proceeds immediately, minimizing the amount needed to be set aside in Escrow
  • Protects passive sellers who have not been actively involved in the business and who cannot verify the representations are warranties that are being made
  • Expedites a sale and potentially increases the return on investment by eliminating negotiation obstacles such as indemnity requirements

The motivation for this product tends to be more about deal facilitation rather than risk transfer.
Please reach out to us if you would like to discuss how this innovative solution could assist with your M&A negotiations.

Neil Moloney, President
Risk Balance Inc.

Patent Insurance. A Worthwhile Solution. Finally.

The costs to defend and enforce patents are significant. These expenses can jeopardize the financial well-being of most organizations. Although insurance for Intellectual Property infringement has been available for quite some time, it had mostly remained cumbersome and cost prohibitive. Annual premiums were typically in the 6 figures, even for smaller organizations.

There have been noteworthy changes in the last few years which is great news for organizations facing increasingly litigious IP environments. Coverage is now more readily available and affordable than ever. The underwriting process no longer requires expensive and lengthy patent searches. In terms of cost, we now see premiums under $20,000, which was unheard of only a few years ago.

In addition to the risks of accidentally infringing on a competitor’s IP, there is no denying that Patent Trolls have taken the Patent Infringement concern to a whole new level. In 2006, suits initiated by Patent Trolls represented 19% of all patent ligation. Six years later, Patent Trolls filed 62% of all patent claims in 2012 (RPX Corporation). The trend continues to this day.

Concerns over the cost of potential patent litigation are well founded. The median cost to defend a patent infringement claim from a patent troll is US$983,000 at the end of discovery, and US$1.75M after trial (Am. Intellectual Prop. Law Ass’n, Report of the Economic Survey 35 - 2013). This does not account for potential damages paid to claimants, such as awards or royalties.

In the face of such potential expenses, Patent Insurance can be a great risk management tool. There are two main components to the coverage;

  1. The Shield: Providing coverage for legal expenses and potential damages against third party allegations stating you are infringing their IP.
  2. The Sword: Providing coverage for legal expenses to enforce your IP against an infringing third party.

With increased availability of coverage and competitive pricing, the timing might be right to explore Patent Insurance. Securing terms will help better asses the cost-benefit of this unique insurance solution for your organization. I encourage you to explore this coverage with your corporate insurance broker. And of course it would be a pleasure for us to assist. Feel free to reach out to discuss in more detail.

Serge Paquette, Vice President
Risk Balance Inc.