Do you know about D&O? (Directors and Officers Liability Insurance)

A number of trends have recently become increasingly apparent in the Directors and Officers (D&O) liability insurance market. D&O is a crucial form of professional liability insurance for all organisations, and this is why…


Operational Concerns

The COVID-19 pandemic led many organisations to make operational changes. A variety of new and enhanced liability exposures can result from such changes, leaving an organisation at risk. For example, stakeholders and shareholders may allege that an organisation has been mismanaged in light of these changes, or throughout the pandemic. Due to the unpredictability of 2020, D&O liability rates and retentions have significantly increased. In addition, there may have been various reductions in cover such as the elimination of shareholder derivative demand investigative costs and added Side A policy restrictions. From the variety of D&O insurance options available, Side A coverage is one of the most highly valued for directors and officers as it prevents them from being personally exposed. Organisations may also find it more difficult to attract the best candidates for these positions if they do not have a Side A policy in place.



Insolvency related claims are historically one of the biggest sources of D&O losses. They have been further exacerbated by the COVID-19 pandemic and subsequent struggles as organisations fail to survive the economic environment. Typically, insolvency related D&O claims occur when stakeholders allege that directors and officers have failed to adequately plan for financial disruption. As organisations suffer the adverse impact of the recent pandemic, senior leadership will be further exposed to insolvency related claims.



Cyber-attacks are occurring more frequently and are increasingly costly for organisations. This results in more D&O claims as the blame for inadequate cyber security can fall on senior leaders. Stakeholders may also allege that senior leaders failed to plan an effective response to an attack. As claims increase, some insurers are introducing tighter conditions and restrictions. This means policies need to be reviewed to check that the necessary cover is in place. Senior leadership should also engage in a risk management strategy to minimise exposure.


Environmental, Social & Governance (ESG)

ESG topics such as Climate change, Black Lives Matter and the #MeToo movement have resulted in many senior leaders being called out on a variety of allegations including negligence, harassment and failure to promote equality, diversity and inclusion. As the United Nations (UN) Environment Programme developed the first ESG guide for the global insurance industry in June 2020, claims of this nature are likely to increase. The criteria has set a high and established level of standards; these are used by stakeholders to screen organisations, making it all the more important to have a strong D&O policy in place.

Click here to read the UN ESG guide.


Derivative Claims

Derivative claims are increasing, likely due to the current economic climate. Occurring when one or more shareholders take legal action against a senior leader (or several), they are specific in that they can be brought about by a minority even if the majority of other shareholders disagree with the claim/s. They typically arise from allegations concerning a breach of duty or failure to act accordingly. Side D cover is the aspect of D&O liability insurance which refers to Derivatives Investigation Coverage and aims to protect the accused from relating costs.


What you can do

  • Re-examine your D&O insurance structure and check what limitations or restrictions are present.
  • Check your Side A and Side D policy conditions.
  • Consider market conditions and trends.
  • Discuss your exposure with an insurance professional.


We’re always here for a chat, please get in touch if you have any questions about your insurance.