The Willis Commentary on... Executive Risks: How Global is Your Global Directors & Officers Policy?
NEW YORK--(BUSINESS WIRE)--March 31, 2004
An important recent lesson learned is that Directors & Officers (D&O) claims are not the exclusive province of the US. So it may be important to note that while most D&O policies are generally designed to provide worldwide coverage, this may not be sufficient for multinational companies. Despite the global wording of many D&O policies, typically they do not specifically address the unique exposures of directors and officers in foreign jurisdictions. As these individuals may face additional personal liability in foreign locales, their D&O policies may require tailoring in order to address these distinct exposures. Consequently, multinationals should closely examine their D&O policies to ensure that their foreign exposures are properly addressed and most importantly, that their directors and officers are properly protected.
Some country-specific modifications require revisions to numerous policy sections. Here are some examples of issues affecting specific countries.
-- UK companies may seek coverage for employees serving as shadow
-- Australian companies may also want additional amendments
including modifications to the Subsidiary definition and the
"Insured versus Insured" Exclusion.
-- In the Netherlands, public-company D&O policies may need to be
modified to include any duly elected or appointed member of
the management of the company, and interestingly enough,
employment practices extensions may be included, along with
punitive damage coverage.
-- German subsidiaries may require a special provision addressing
their unique supervisory boards and management committees.
-- Italian directors and officers may want to inquire whether
they have an endorsement that addresses their unique tax
-- Canadian directors facing personal tax and benefit liabilities
may be curious as to whether their D&O policy has the required
Foreign endorsements are not the only issues to keep in mind if you are part of a global company. In various countries (Spain, Brazil, and Hungary to name a few), a locally issued D&O policy may be required as well. In many cases, these policies reflect small limits that serve as "filler" for the broader, global D&O program. They are tailored to address local requirements, are issued in the language of the local country and usually include a minimum premium. The master global D&O program then responds on an excess basis.
Willis Group Holdings Limited (NYSE: WSH) is a leading global insurance broker, developing and delivering professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. With over 300 offices in more than 100 countries, its global team of 13,000 associates serves clients in some 180 countries. Additional information on Willis may be found on its web site www.willis.com.
Editor's Note: Don Bailey, National Executive Risks Practice Group Leader, can be reached at (212) 820-7476.