The importance of D&O Liability Insurance

As a result of deteriorating macroeconomic conditions in Europe, claims against directors and officers and senior employees for actual and alleged breach of duty, neglect, misstatements errors and omissions are at an all time high.

Companies must invest in Directors and Officers Liability Insurance in order to protect their current, future and former directors, officers and officers from criminal, regulatory or civil legal action.

Many businesses are embracing opportunities in IT investment, product innovation or emerging markets, and with so much at stake, directors and officers liability insurance (D&O) becomes a serious issue.

AIG‘s global franchise, 40 years’ experience in this sector and our ability to analyse our own experience of claims and exposures gives us a unique view of the operating environment of directors and officers in today’s world.

D&O Insurance covers directors and officers personally for claims made against them where the company cannot or does not indemnify insolvency or legal prohibition. It also reimburses the company when it has indemnified directors subsequent to a claim made against them.

Directors and officers face several worries when they take up their positions, including exposure to criminal or regulatory issues, insolvency risks and consequences of cost cutting. There is also the added pressure of exposure to investor relations, disclosure, forecasting and reporting risks, business model changes and executing transactions and alliances. In fact, M&A activity is one of the richest sources of litigation.

US is at the top of the list with the most costly litigation, with Europe following closely behind. France, Ireland and the UK are next in line for the largest number of litigation cases.

Securities Class Action in the US, rolled out in 2010, means that judges are now given greater strength to refer foreign components of US actions to a more geographically relevant arena, including Europe.

Private companies are no longer safe from potential legal actions against their directors and officers. In fact since 2008, the number of claims against directors and offices of private companies has overtaken that of public companies.

As a result, D&O purchasing is on the up. European companies with any D&O exposure in the US whatsoever must be aware of any and all changes to global policy. At AIG, we offer a global D&O insurance policy, backed up by local policies. We can issue and service locally admitted D&O policies from its network of over 90 offices around the world - more than any other insurer worldwide.

Visit the AIG website to view the guide to D&O Liability Insurance.

This was posted in Bdaily's Members' News section by BeOn .