Protecting Nordic business leaders – learnings and trends from the global D&O market

Why do Nordic businesses need a D&O insurance?

A Directors and Officers Insurance solution addresses the liability exposures of the management team. This means that it responds to claims brought against the individual directors and officers, that can come in the form of investigations or civil proceedings, from investors, other third parties, as well as their own companies. Circumstances most commonly leading to D&O claims are allegations of misrepresentation in corporate disclosures, M&A deals, sudden stock price drops, but also corporate insolvencies, shareholder activism and broader regulatory scrutiny. At Zurich Nordic we had experience with all of these types of D&O claims.

Principally, a D&O insurance helps directors and officers respond to litigation and protect their personal liability and assets (what is typically referred to as a “Side A coverage”). Moreover, a D&O insurance can reimburse the company for the cost of indemnifying directors and officers (Side B), and protects the company itself from securities-related claims (Side C).

It is important to stress that groundless claims can be both expensive and time consuming to handle. An insurance solution with a reputable carrier provides access to competent and effective claims handling. It benefits the company as well as the individual.

In addition to the traditional sources of D&O claims, what risks do you see materializing in your claims data?

In recent years we have seen more claims relating to topics such as climate change, cyber security, and complex multi-jurisdictional regulatory exposures. Further, we see more lengthy and costly litigation.

Are there any emerging risks and exposures to be on the look-out for?

Due to the economic downturn we believe that a surge in bankruptcies is likely. Creditor claims in an insolvency are a major risk, particularly for directors and officers of small and medium-sized companies.

Also ESG related litigation is on the rise given that investors, employees and consumers increasingly expect companies to be actively addressing sustainability in their structures and operations. Those who fail to address these issues may open themselves up to litigation. The pressure to act is coming from various stakeholders such as customers, employees, regulators, and investors.

How can businesses build resilience?

When facing a D&O claim, make sure to involve your insurance company at an early stage. Engaging professionals helps set a strategy for the defense which will save time and costs in the long-run.

Our D&O Liability Solution provides comprehensive protection against the evolving exposures faced by directors and officers. They are tailored to cover current and emerging risks, with customized product and service solutions.

For more information on Zurich’s Directors and Officers insurance solutions, please contact Hanna Engren, Nordic Head of Financial Lines.