Is there a weak link in your D&O insurance?
Companies that are engaged in placing or renewing their directors and officers’ (D&O) liability insurance cover will be very aware that the insurance market continues to be in a ‘hard’ cycle, where restricted cover and higher premiums create coverage issues and costs pressures. It can be challenging to obtain adequate insurance cover that is also value for money.
What is sometimes overlooked is the ability that companies and their directors have to extract additional value from their current arrangements by improving the quality of their D&O insurance wordings and deeds of indemnity to ensure they are consistent, comprehensive and reflect current market practice.
In our experience, it is common for there to be a number of legal issues which, if identified, can usually be addressed easily and without controversy and – crucially – before any claim arises. And usually for relatively little cost and no additional premium.
Seen in that light, a periodic legal benchmarking review of a company’s D&O policy and deed of indemnity is a common-sense and cost-effective step for companies to take that should feed into its insurance renewal process and form part of its risk management practices.
Set out below are some of the main questions that directors and their companies should consider. These will be particularly relevant to any director considering a new board appointment.
We have extensive experience in advising companies and their officeholders about D&O insurance, deeds of indemnity and constitutions. Please get in touch with one of our team members to discuss how we can help.