Amongst mid-market and large companies, particularly publically listed companies, the use of Directors’ and Officers’ (D&O) insurance is increasingly important. Yet there are circumstances where conventional D&O policies may have been exhausted, fail to indemnity certain risks, or are not triggered – leaving directors and their assets exposed.
Introducing ‘Solo’
Solo is Gallagher’s proprietary D&O Side A difference in conditions (DIC) policy. Specifically designed for directors of non-USA domiciled and/or non-USA listed companies, it provides directors an additional, top-up layer of protection above the primary D&O policy.
Key facts:
- For senior executives of non-USA domiciled and/or non-USA listed companies.
- Up to GBP 75m of capacity available.
- Built on an ‘any one claim’ basis, so a new limit of liability is restored for each separate, unrelated claim.
- Traditional D&O exclusions narrowed, or removed entirely.
Additional protection for directors
When both an individual executive and the corporate entity are named in the same claim (anything ranging from a written demand alleging a wrongful act to a lawsuit or a formal investigation), the application of D&O insurance may become problematic. This is because the D&O policy will provide narrower or no coverage for the company and there may be a need to allocate costs and expenses between the covered individual(s) and the uncovered entity. When there is also coverage provided for the company, the individual(s) will be sharing and exposing their limits to often larger and more frequent claims, which needs to be taken into consideration.
Case Studies
Unfair Treatment of Shareholders
A minority shareholder sued a company’s directors claiming they had taken decisions which had unfairly prejudiced his position. Due to conflicts of interest, each director was set up with separate legal representation and the claim was ultimately settled by the company purchasing the disputed shareholding from the shareholder. By the time the matter settled, the insurance had paid out a six figure sum in relation to the defence costs for the directors in question.
Insolvency and Disqualification
After a company went into liquidation, the liquidator revisited transactions approved by the directors, decided they should not have taken place, and indicated an intention to sue the directors for a return of the monies involved and investigate disqualification proceedings. The policy covered costs to defend the directors (involving substantial legal and experts’ costs) and the claims were subsequently dropped.
Benefits and features*
Solo is designed to provide comprehensive protection using a broad policy wording with wider definitions and minimal exclusions. Designed by our Management Liability brokers and claims specialists, it affords a valuable layer of protection for directors.
- Up to GBP 75m in capacity available
- Legal expenses of a director or officer to challenge any attempts from another director or officer to block or restrict access to the underlying D&O or Side A Difference in Conditions (DIC) policy
- Additional limits for loss when the underlying limits of liability have been exhausted
- Additional defence costs and legal representation expenses
- Automatic same claim reinstatement for main board members
- Narrow conduct exclusion
- No prior and pending litigation exclusion
- No bodily injury/property damage or pollution exclusions
- Inclusion of prosecution costs
- Drop down for non-indemnifiable losses where Lloyd’s of London are licenced to pay a claim in a territory where the underlying insurers are not
- Automatic insolvency discovery period
- Emergency Defence Costs and Legal Representation Expenses
- Clear advance of defence costs within 25 days of valid receipts
- Mitigation expenses to prevent or mitigate a claim
- Broad definitions of Claim, DIC Situation, Insured, Investigation, Loss, Pre-Investigation and Wrongful Act
- Pre-agreed discovery periods for non-renewal, takeovers and mergers and retired directors and officers.
Why Gallagher Life Sciences Practice?
Our specialist Life Sciences Practice are located in The Walbrook Building in the City of London. The team offer all you would expect from one of the world’s largest brokers – specialist products and strong influence with the insurers underwriting risks in the Life Sciences sector. We offer a dependable, personal service that seek to exceed your expectations from day one.
- A specialist team with many years’ experience of working with companies in the Life Sciences Sector.
- A personal level of broking and risk management support from a niche broking team but with the backing of a global broking house providing the size and scale to ensure delivery of broad policy cover at competitive levels of pricing.
- Capability to service and advise broad range of companies from early stage through to established publicly traded global organisations.
We offer advice across a number of insurance products including:-
- Directors’ & Officers’ Liability
- Cyber Protection
- Intellectual Property Protection
- Warranty & Indemnity Insurance
- Cargo, Supply Chain & Stock Throughput
- Errors & Omissions and Professional Liability
- Human Clinical Trials Liability
Source:
* These are brief product descriptions only. Please refer to the policy documentation paying particular attention to the terms and conditions, exclusions, warranties, subjectivities, excesses and any endorsements.
