It offers financial protection to individuals who are directors, partners or officers (managers/ supervisors) of a company for the cost of compensation and claims made against them for alleged wrongful acts occurring during the course of running the business. It is sometimes referred to under “Management Liability Insurance” which often includes D&O Insurance as well as the company/entity also being protected, and/or Employment Practices Liability, more details of which are described over under “Associated covers”.
Figures from Datamonitor’s SME insurance survey, conducted in 2014, suggest that only 23.3% of small and medium-sized businesses have any Directors and Officers cover. This is in stark contrast to large corporate businesses where take up has increased significantly over the past 20 years. Now at almost 100% among FTSE 250 companies, this has been driven by directors themselves, who have refused to take up a directorship without cover in place.
The fact is though that directors of small businesses face exactly the same risks as those in large companies. Without cover in place, these directors are vulnerable in the event of legal action against their business. Even worse, they are unlikely to have the in-house legal resources that their larger counterparts would have, if they were in the same situation.
Read the attached insight report from our insurer partner, Allianz, for more information. If you would like to discuss the insurance needs of your own business, please talk to the specialist D&O team at Arlington, who will help you to put adequate insurance cover in place.