Protection for the directors and officers of companies in the event of claims.
Directors and officers of public, private and not-for-profit companies – whether acting in a full-time, part-time, honorary, or non-executive position – are responsible for the governance around risks including employment practices, cyber security, environmental, social and governance (ESG) requirements and more.
Failure to do so may lead to personal liability for the individual director or for the entire board of directors.
Some common D&O risk scenarios can include:
- Reporting errors
- Unfair competition
- Failure to comply with regulations or laws
- Employment practices and HR issues
- Insolvent trading
- Occupational health and safety breaches (including corporate manslaughter)
- Breaches of fiduciary duties owed to the company and shareholders.
What does a D&O policy cover?
D&O policies offer liability cover and can provide protection against damages following allegations of a wrongful act committed by the directors or officers of a company.
Cover can include current, future, and past directors and officers of a company and its subsidiaries and provides protection for individual acts performed or omitted while in that position with the company. D&O insurance policies do not cover deliberately fraudulent or criminal actions.
D&O policy structures vary depending on the insuring agreements purchased, however the policy aims to provide protection for individual directors and officers and in certain circumstances the company (entity cover) against:
- Defense costs, legal representation expenses, damages, judgements, settlements, bail bond costs, crisis costs, deprivation of asset costs, prosecution costs, public relations expenses
- Monetary damages, settlements and awards resulting from claims
- Tax contributions where the parent company has become insolvent and there is personal liability of an insured
- Losses incurred for civil fines and penalties (unless prohibited by law)
- Crime (fidelity) losses.
Working together to provide a tailored solution
D&O cover remains a necessity for many companies as boards grapple with new and emerging risks and how best to deal with them. EBM takes a strategic approach when going to the insurance market for D&O cover:
- Your business’ internal and external compliance strategy/audit processes
- How risks are being identified and mitigated; your organisation’s risk strategy
- For those risks that can’t be mitigated, where does insurance fit?
- What are the emerging risks (changing technology, business models, regulations)?
- What risks, errors and claims does the D&O policy need to cover?
- Insurers that are best placed to offer the right coverage for your organisation.
By working together, we can explore the liability cover options and design a program to meet your business’ needs.
