Insuring directors and officers around the world

11 September 2018

A new online resource will inform decisions about how to insure directors and officers around the world.

In the past five to ten years the amount of litigation against directors and officers (D&O) has increased significantly.

In the US, there were a record number of federal securities class action cases in 2017: 52 per cent more than in 2016 and double the 1997 to 2016 average.

Countries are changing their legal and regulatory frameworks in a bid to hold companies, and the individuals who run them, to account.

Markets to watch currently in this respect include Brazil, China and India. Instant news and social media ensure there is no hiding place in this digital age for individuals or companies and governments and their regulatory bodies are under increasing pressure to be strong on enforcement as well as upholding their ethical responsibilities.

In the current climate of global economic competition, governments across the world are looking to ensure their legal systems are robust and up to standard to encourage international business within their territories.

Quite simply, if their regulatory standards are not seen to be robust enough then they will not attract the international trade they desire to compete globally.

A large part of this is ensuring compliance with corporate governance standards, and that these are up to the standard a sophisticated client would expect in a developed market economy.

To keep track of this constantly changing landscape, JLT Specialty’s D&O team has spent the past three years gathering information from a variety of sources, public and private. We now have data for around 100 countries, which will be updated on an ongoing basis.

Negotiating local policies

By giving its customers access to the online database, JLT hopes to arm them with important information before they begin to negotiate local policies.

As well as recording insurance-related legal issues for each country, the database – the first of its kind – tells users what the broader legal and claims environment is and tracks levels of corporate litigation.

Though important for any multinational, the new database, which went live in late June, will be particularly useful for construction sector companies working on government-led projects such as infrastructure development, where the pressure to be compliant can be high.

The most important message to emerge from the compilation of the database is that renewing or replacing local D&O policies should not be a tick-box exercise, and neither should it be one of the last points discussed.

Buying decisions must be driven by risk-based analysis so that companies can ensure they are purchasing correctly, wherever they are working.

For more information contact Kurt Rothmann, Head of Management Liability on +44 (0)20 7528 4961