The Challenges Of Securing Directors & Officers Coverage
First what is D&O coverage?
Directors and officers (D&O) liability insurance protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.
Covid-19 has made it extremely challenging for insurance companies. At this time many carriers have stopped writing D&O coverage, writing fewer policies, and may be unwilling to increase the limit for those companies that already have coverage. The increase in risk has carriers rethinking several factors.
First, the D&O market before the pandemic was extremely competitive which kept pricing down. Now they will be re-evaluating pricing going forward to capture the proper premium.
Second, the carriers are most likely going to write specific language in the policy excluding pandemics, and communicable diseases. More than likely there will be an increase in claims and litigation because of the pandemic.
The challenges that boards are facing are daunting with covid19:
- The balance of when to open safely to try and become profitable again
- A board decision not to re-open and file for bankruptcy
- Making sure to follow CDC and board of health guidelines
- Employees, clients/customers, and vendor safety
- Challenge of employees not wanting to return, especially the ones making more money on unemployment
The result of all mentioned above is causing board members to resign leaving the company in a real tough spot, especially when it is not a paid board position.
Consult with H&K about possible solutions for your company.
