Financial Solutions

Directors & Officers Liability Insurance

Directors & Officers (D&O) Liability Insurance protects company management from damages and usually painful legal fees, payable from their own personal assets, following a claim made against them for their personal liability for wrongful acts they committed under applicable corporate and/or employment laws.

In late 2001 and early 2002 the insurance markets were forced through massive change, stemming from increased severity and frequency of losses, mainly due to the spate of corporate governance disasters in the USA. The impact on Asian companies, especially on those with securities listed in the USA, was significant.

JLT works closely with companies to sell the benefits of their risk profile and corporate governance strong points to the insurance markets. We also spend time understanding current and future development plans to ensure that we preserve the coverage in crucial areas.

D&O Insurance will be increasingly important in Asia, particularly as companies appreciate the importance of providing adequate cover to comfort and attract directors. There will be a growing focus on this as companies compete with increasing severity for the services of good directors.

Who is covered?
Parent company and subsidiary companies: Past, present and future directors (including shadow directors), officers, and other individuals with personal liability for management decisions, who committed a wrongful act whilst performing managerial duties. The policy can be extended to cover employees for employment related claims, as well as outside directors. Divested/new subsidiary companies should be covered for Claims made against wrongful acts committed during the time when a divested/created/acquired company was a subsidiary company.

What is covered?
The insurer pays on behalf of the insured for the latter's legal liability for damages plus costs, charges and expenses, as a consequence of a claim made against, and based on a wrongful act committed by an insured person.

What is excluded?
• Bodily injuries/Property damages
• Criminal acts, final adjudication
• Uninsurable matters
• Pollution

When does the coverage apply?
The D&O Liability insurance is triggered by claims made against the insured person during the policy period based on a wrongful act committed at any time (see section 'Who is Covered', specifically on new/sold subsidiaries), provided that such claims are reported within the agreed reporting provisions in the policy. The coverage does not apply to claims or circumstances which could reasonably lead to a claim, of which the insured had knowledge of or had reported to another insurer prior to the first inception date of the policy.

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