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Understanding D&O Insurance for Risk Management

Learn about the history, coverages, and limitations of Directors and Officers Liability Insurance, which protects executive employees from financial risks. Explore how this insurance motivates career advancement and safeguards against accusations. Developed by Lloyd’s of London, D&O insurance is crucial for businesses in today's corporate environment.

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Understanding D&O Insurance for Risk Management

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Presentation Transcript

  1. D&O Insurance June 5th 2013

  2. Curriculum • General Information • History • Coverages • Limitation • Vendors

  3. General Information • Directors and officers liability insurance • insurance to manager and executive persons of of the company • Focus on those people and not the company itself • Covers losses and high risk decisions of executive employee • “Personal financial protection” • Motivates employees to take higher positions in the company

  4. History • DevelopedbyLloyd‘sof London • Established in USA in 1930‘s • In the 1980‘s there was a „D&O-crisis“ • Manycompaniestookthechancetoprocuretheinsurance • As a resulttheyadded a numberofclauses in thepolicy • the „D&O-market“ was born • Thereisnostandard D&O-form • Theyused in a similarway (sharedoutline)

  5. Coverages • Insurance covers multiple organs: • Management ofthecompany • Governingbody • General managers • Executive positions • Insurance comes in toaction, if… • … thereisnobadintention • … thereisnolooseofdutytotakecareofthirds (customers, vendors, owncompany/employees) • … theinsuredpersonis not in knowledgeof a fault in thepast

  6. Insurance protectsyoufrombothsides… Inside thecompany Outside thecompany executiveorgans customers employees vendors

  7. Limitation • In caseof a accusationyouhavetokeep in mindthefollowingthings: • The claimantisthepersonwhohastoproof YOUR fault • Youare not guiltyuntilsomeoneisabletoproof a possiblemistake • Ifyouown stock optionsfromthecompanyyouareworkfor, theinsurance will not cover thefullamountwhichisinvolved in thecase • Usuallythereis a compromisebetweenthetwoparties • The insurance will not cover anycostsifyoudidsomethingwith a badfaith

  8. Chartis • Chubb Corp. • The Travekers Companies • ACE Limited • XL Group • Zurich Financial Services • Allianz • HCC Insurance Holdings • The Hartford • CNA Financial Group

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