Airmic tackles complexities of D&O with new guide for boards

A new publication from Airmic aims to demystify directors’ and officers’ liability insurance, in a complicated area of insurance which often results in a disconnect between the product and its end users, creating the risk of a significant expectation gap in the event of a claim.

In this complex line of cover, no two D&O policies are the same or even directly comparable; and the general approach of D&O insurers is to provide cover on an affirmative basis.

Directors & Officers Liability Insurance: Perfecting Governance, Liability Challenges and Questions, published by Airmic with McGill & Partners, aims to provide an insider’s guide to D&O for end users, and for board members in particular.

Twelve questions make up the core of the guide, focusing on practical issues that commonly arise.

Although designed to be answered by reference to specific policy wordings, the answers are intended to provide general guidance as to the likely position, subject to the significant caveat that no two D&O policies are the same.

Julia Graham, CEO, Airmic, commented: “Asking the ‘right’ questions about directors’ and officers’ liabilities and insurance, before a problem arises, makes good management sense. This guide is an important contribution to our members who support their leadership, as they collectively navigate an increasingly complex world and associated governance responsibilities.”

The questions are posed from the point of view of directors and board members themselves.

• What limit am I covered for and how do I know it is the right one for my industry sector?

• Am I covered for the right types of exposures especially with regard to emerging risks?

• What happens to my insurance protection when I leave the company?

• What happens to my insurance protection in the event that the company is acquired by or merges with another company?

• What am I covered (and not covered) for and how do I make a claim under the policy?

• What impact (if any) does the company’s ability and willingness to indemnify me have on my insurance cover?

• How (if at all) might the conduct or knowledge of others with whom I share my limit affect my position?

• When (and subject to what conditions, if any) does the policy allow me to appoint a lawyer of my choice to protect my interests in the event of a claim?

• If the company becomes insolvent, does the cover remain in place and am I covered for the legal representation costs of interview by the liquidators?

• What else should I be worrying about by way of restrictions or limitations on cover?

• With which and how many employees below board level do I share my insurance limit?

• Is any part of the limit of indemnity ringfenced for me and/or for my fellow board members?

After seeing a preview of the guide, one Airmic member commented: “Don’t wait until you have a claim, read this guide and get comfortable now.”

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