Directors' and Officers' insurance (D&O)
Tailor-made D&O starts here
Protection for Directors and Officers
If things go wrong in a business, the senior managers, including directors, officers and partners, are at risk of claims being made against them.
Directors’ and Officers’ (D&O) insurance and Management Liability insurance can help protect these individuals against the resulting financial costs, such as fines and legal fees.
Investigations into directors personally. whistleblowing, and the self-reporting regime could all lead to a director needing the assistance of legal counsel to put forward their case. As these are personal claims, a director’s personal assets could be at risk.
D&O insurance is there to pay for costs relating to mounting a defence, and any damages or settlements relating to the matter. Any allegation made by a third party against a director or officer, no matter how frivolous, needs to be vigorously defended, otherwise, there is a risk of judgement being entered in default of a defence.
Other areas that give rise to claims include:
- Positions on outside boards
- Wrongful termination, sexual harassment or discrimination
- Initial public offerings
Directors and officers can be held liable for their own actions and inactions – and the actions of their co-directors. Directors’ personal liability for the performance of a company is unlimited. If the shareholders want to sue for mismanagement, they can, and do, quite frequently.
What does Directors’ and Officers’ insurance cover?
Directors’ and Officers’ (D&O) Liability insurance gives financial protection in the event you are sued personally. D&O protects you against claims made against you or your co-directors within the scope of your everyday business.
It is there to cover you for legal costs as well as any damages.
D&O insurance covers directors' acts and the cover should extend to those individuals that are subject to regulatory approvals (such as the Senior Managers regime), the Data Protection Officer, General Counsel, Risk Manager and other senior individuals (including employees in managerial capacities).
Notably, D&O is distinct from a Professional Indemnity policy (which may be referred to as “PI”, Errors & Omissions or “E&O”, or Civil Liability), which is designed principally to protect the company from any claims arising out of professional business (for example, poor advice or service to a client).
What is covered
Legal costs
Subject to the terms of the policy, D&O will cover the legal costs of defending your reputation, including criminal proceedings.
Compensation payments
D&O insurance will pay damages arising from alleged acts, errors and omissions.
Investigation costs
D&O covers day-to-day costs relating to responding to a variety of investigations, including attending interviews with insolvency practitioners.
Director disqualification proceedings
D&O covers costs relating to defending directors from being disqualified from holding office.
Personal liability for corporate tax
Where individual directors are held liable for corporate taxes due, D&O can step in to pay.
Extradition proceedings
Providing finance to mount resistance to extradition requests.
Not covered
Criminal fines and penalties
This includes FCA fines, or any other liabilities that are uninsurable as a matter of law.
Proven dishonest or fraudulent conduct
However, if such conduct is alleged, the policy requires insurers to provide legal costs on an ongoing basis, unless/until proven guilty
Optional
Run Off Cover
Where directors retire or companies are sold, run off cover offers the indivduals protection should claims be reported relating to their tenure with the organisation.
Distressed situations
When faced with distressed situations in the business, for example insolvency, many directors choose to revisit their policy and examine limits and terms before proceedings begin.
Why choose Howden for D&O?
Howden’s D&O team offers the marker leverage and expertise to deliver for clients, providing solutions to what can seem to be insurmountable issues.
Our team advises on the specific coverage limitations and implications and engages with insurers who are willing to specifically underwrite policies we present.
Writing our own bespoke policies means wordings are designed to be favourable to the insured, so you can have the utmost confidence you will be protected.
$1.2bn
premium placed into the Financial Lines market in 2022
30
in-house lawyers and senior claims handlers
Everything is focused on the prompt payment of claims
For an insurance broker, the connection between claims and account management is the difference between happy or irate clients, and good outcomes versus bad ones.
We make sure that our legal, technical & claims specialists are involved throughout your insurance cycle.
Our claims advocates and lawyers are fully embedded into the end-to-end client service process, right from the policy design phase. From the outset, they work with the account management team to get your wordings right. They are on hand for technical queries through the policy period. Then they handle any claims that arise – and so carry that knowledge of your business and your wordings throughout the whole process.
Finally, they feed this back in to your account management team at renewal – using what they have learned, to drive the best cover, structure and price. A continual cycle, driving challenge and improvement.
Our legal, technical and claims specialists deal with D&O claims, day-in day-out. They are deeply experienced in handling large, complex and high-profile cases.
Unlike other brokers, we don’t outsource our claims function, or treat is as a back-office thing. To us, claims is the engine room and should be front and centre of the whole placement process.
Howden's Fund D&O Insurance portal
At a time when efficiency and quality are essential, our Fund D&O portal has been uniquely constructed with both in mind. Not only does the portal deliver on the most competitive premiums, but does this on our bespoke Howden written D&O policy wording.
We have partnered with Newline, Allied World Assurance Company, Starr and Sompo, to create a portal offering backed by 100% AM Best A-rated capacity.
Informe: Perspectivas D&O 2024
Nuestro último informe sobre el mercado de D&O examina las tendencias actuales y sus efectos sobre el precio de las primas en el futuro.