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Growing enterprises in Asia have been experiencing a substantial rise in pricing and renewal rates for directors and officers (D&O) liability insurance, alongside increasingly limited coverage terms. The trend is driven by evolving exposures to people risks (such as employment lawsuits), M&A risks, rising insolvencies, as well as an increase in litigation and claims in the region and globally.
There has also been an increase in liability suits filed by the company against individual D&Os. These suits are often "event-driven" as a result of the failure of senior D&O's to adequately respond to high-profile events and trends. Such events include cyberattacks, climate change, and allegations of misconduct.
In some cases, a company’s senior company leaders could find themselves having to pay a significant portion of settlement and legal costs out-of-pocket.
With companies facing growing scrutiny on every aspect of their businesses from regulators, investors, shareholders, customers, and employees alike, D&O insurance can offer organizations and their senior leaders comprehensive and cost-efficient coverage against unexpected claims and litigation.
How does D&O insurance work?
Directors and officers liability insurance protects your company through indemnification should your directors and officers be found liable for legal misconduct, errors, and allegations.
D&O insurance works in three simple ways:
- By protecting personal assets from potential exposure in management-related misconduct.
- By covering the cost of indemnifying directors and officers.
- By limiting the liability to the company's balance sheet in a lawsuit.
The image below illustrates the different levels of protection that can be chosen based on your business needs:
To accurately assess risk exposure and obtain a cost-competitive rate with sufficient coverage and protection, it’s advisable to work with a trusted and experienced insurance broker with both local and international expertise in D&O coverage.
Why choose Marsh
At Marsh, clients have trusted us to place more than US$100 million of D&O insurance premium per year on their behalf. We can help you assess and bridge your D&O protection gap by securing cost-efficient insurance coverage that is optimized for your needs.
To discover the appropriate D&O insurance coverage for you, Marsh offers free benchmarking that gives companies and their risk professionals access to predictive modelling capabilities. Estimates of potential claim frequency and severity can be used to analyze potential limit and retention structures, which enables insight into projected average net losses and the volatility associated with each coverage option.
The analysis from the benchmarking report can ensure that your business purchases the right amount of coverage and get the full value out of D&O insurance programs.
