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Directors & Officers: Navigating the landscape

My hot take: Company Director = Circus Performer.

Not seriously of course, but it does involve a juggling act with various roles and responsibilities serving as flaming pins. There is a tightrope to walk.

Fortunately, insurance can provide some measure of comfort and protection to anyone occupying this role, and indeed, I write on the presumption that you already have this, or at least have a basic understanding of it. However, for the uninitiated: Directors and Officers Liability Insurance, commonly referred to as D&O, is designed to protect Directors and senior decision makers of a business against claims of wrongful conduct.

Broadly speaking, it will pay for the costs associated with defending or settling HSE investigations, employment disputes and claims arising from, but not restricted to: breach of duty/trust, negligence, defamation and pollution – this could mean almost anything! It should also be remembered that the limited liability status of a company will not necessarily act as a barrier should a claim arise.

D&O isn’t by any means a ‘silver bullet’ that allows you to act with impunity but the scope of cover it affords should make it a no-brainer for any business especially as the legal landscape is constantly changing and we are starting to see a rise in the number claims particularly in the following areas:

  • Broadening of corporate criminal liability

UK Investigations are beginning to reflect the trend towards culpability of the individual; highlighted through the Serious Fraud Office (SFO) increasing use of deferred prosecution agreements.


  • Tougher Stance on Insolvency

In years following recession and uncertainty more businesses have fallen victim to insolvency, with legislation since 2015 having enabled liquidators to sell claims arising from fraudulent trading to third parties, thus providing further incentive to litigate.


  • Robust Regulation

Lessons learnt in the collapse of high-profile companies, like BHS, have toughened the stance of The Pension Regulator in cases of insolvency. Directors are expected to be held to account, with greater scrutiny being placed on their activities leading to liquidation to avoid short falls in pension schemes.


  • Emerging Risks

The world of tomorrow today! We live in a globalised society, one that’s increasingly connected and has encouraged discourse and allowed certain issues (technology, environmentalist, gender) to permeate the public consciousness. Please stop and consider if your responsibilities as a Director are against this backdrop. D&O claims for environmental exposure, sexual harassment and cyber breach are becoming increasingly prominent.

Of course this is a small sample of possible claims and any of the highlighted issues can spell protracted litigation and costs.

Should you have any questions and queries over the value or scope of D&O cover please don’t hesitate to contact ProAktive.

By Simon Wright Dip CIIAccount Executive

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