You can see why the premiums were “disproportionately high” when the leader of the company has made some questionable decisions in the past, including the lapsing of the company D&O policy.
Definitely a 1) Dumb move 2) Indication of real problems i.e. maybe he or Tesla are kind of cash poor or just plain broke at the moment 3) All of the above plus he’s really a very unstable guy (flame thrower and underground “boring” companies??, said about 3 years ago there will be only self driving cars in 10 years which isn’t close to reality, space launches withouut purpose etc. etc. etc.).
It’s probably a smart move for him. As Tesla is still losing money, and/or making small profits, the removal of the insurance cost might make their earnings look better.
Earnings stability and predictability is more important to wise investors than short term cash flow….. unless you have a serious cash flow or cash draw problem.
Musk has never been a conformist . . . and never will be. He is unconventional in every sense of the word, and will not let others dictate his actions. This is just another example and he has the assets to back it up.
The man is a walking, talking D&O claim just waiting to be triggered by an off the cuff statement or tweet. To some extent I’m almost surprised he was even able to get a quote for D&O coverage and that may in fact be why he is claiming coverage was not available at a n acceptable cost (perhaps it wasn’t available at any cost).
Nonetheless, I’d be curious what the level of deductible (or self insurance reserve) any quoted coverage required, any specific conditions that may have been specified on allocations of losses, any exclusions that may have been included in the quoted coverage (particularly if any officers (like Musk) were excluded from coverage) and limits offered on the per occurrence and aggregate coverage.
“disproportionately high.” ?? I’d say that whatever premium he was quoted was right in line with the risk that the carrier is taking on. Dude can’t stop putting his foot in his mouth and that puts the whole organization at risk. Stakeholders would be wise to take out a key man policy on this guy because in my view he is not long for this world.
If he thinks it is high now, just wait until he tries to get D&O after a massive lapse… So he lets a “claims made” policy with a “prior and pending” retro date lapse… I wonder if anyone sat down and explained that if he lets this thing lapse then his “claims made” form likely won’t provide much coverage… I hope he purchased the extended reported period…. The irony here is that his refusal to purchase a D&O policy could actually give rise to a D&O occurrence…
P.S. This man is a walking D&O claim waiting to happen… Now to be fair, I wonder what his D&O limits were? I have not personally seen higher than $15,000,000 which I am sure he could very well self insure… Realistically, he probably needs a D&O policy for $50,000,000+. Does anyone know how high those limits get in the “national accounts” markets? I can’t see an admitted market wanting to take a crack at this one anytime soon…
You can see why the premiums were “disproportionately high” when the leader of the company has made some questionable decisions in the past, including the lapsing of the company D&O policy.
Definitely a 1) Dumb move 2) Indication of real problems i.e. maybe he or Tesla are kind of cash poor or just plain broke at the moment 3) All of the above plus he’s really a very unstable guy (flame thrower and underground “boring” companies??, said about 3 years ago there will be only self driving cars in 10 years which isn’t close to reality, space launches withouut purpose etc. etc. etc.).
It’s probably a smart move for him. As Tesla is still losing money, and/or making small profits, the removal of the insurance cost might make their earnings look better.
Earnings stability and predictability is more important to wise investors than short term cash flow….. unless you have a serious cash flow or cash draw problem.
Musk has never been a conformist . . . and never will be. He is unconventional in every sense of the word, and will not let others dictate his actions. This is just another example and he has the assets to back it up.
Let’s see who else might follow.
The man is a walking, talking D&O claim just waiting to be triggered by an off the cuff statement or tweet. To some extent I’m almost surprised he was even able to get a quote for D&O coverage and that may in fact be why he is claiming coverage was not available at a n acceptable cost (perhaps it wasn’t available at any cost).
Nonetheless, I’d be curious what the level of deductible (or self insurance reserve) any quoted coverage required, any specific conditions that may have been specified on allocations of losses, any exclusions that may have been included in the quoted coverage (particularly if any officers (like Musk) were excluded from coverage) and limits offered on the per occurrence and aggregate coverage.
“disproportionately high.” ?? I’d say that whatever premium he was quoted was right in line with the risk that the carrier is taking on. Dude can’t stop putting his foot in his mouth and that puts the whole organization at risk. Stakeholders would be wise to take out a key man policy on this guy because in my view he is not long for this world.
If he thinks it is high now, just wait until he tries to get D&O after a massive lapse… So he lets a “claims made” policy with a “prior and pending” retro date lapse… I wonder if anyone sat down and explained that if he lets this thing lapse then his “claims made” form likely won’t provide much coverage… I hope he purchased the extended reported period…. The irony here is that his refusal to purchase a D&O policy could actually give rise to a D&O occurrence…
P.S. This man is a walking D&O claim waiting to happen… Now to be fair, I wonder what his D&O limits were? I have not personally seen higher than $15,000,000 which I am sure he could very well self insure… Realistically, he probably needs a D&O policy for $50,000,000+. Does anyone know how high those limits get in the “national accounts” markets? I can’t see an admitted market wanting to take a crack at this one anytime soon…