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Willis Towers Watson Essential Guide to D&O Insurance

Willis Towers Watson have published a new Essential Guide to Directors & Officers (‘D&O’) Insurance.

Directors have always been bound by many duties arising under jurisdictional laws. The difference in today’s world is that stakeholders have far greater forms of remedy against directors and there is an increased willingness to pursue claims against them.

Whether or not you are ultimately held liable for such claims, the defence costs associated can be expensive, and the process can take months or even years. In practice, once a claim is alleged against a director for any wrong-doing, they have two sources of protection –indemnification from the company or insurance under a Directors’ & Officers’ (D&O) Liability insurance policy.

D&O Liability insurance – back to basics

A D&O insurance policy is written on a ‘claims made’ basis, meaning it covers claims made during the policy period (typically 12 months). Claims can be made for wrongful acts committed during the policy period or prior to the inception of the policy, subject to any exclusion or retroactive date.

The limit provided is often an aggregate amount to be shared between all directors and officers of the company, including directors and officers of any directly or indirectly owned subsidiary, and cover is usually written on a worldwide basis. Many policies contain certain additional limits, for example, cover for the non-executive directors once the main limit is exhausted.

Some policies may alternatively be written on an “any one claim” or “AOC” basis, such that the limit applies for each claim, rather than in aggregate. However, that is less common in the current market (as of July 2020).

This new Guide is essential reading for NEDs – to obtain a copy of the Guide click on the ‘Download’ button above.


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