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Growing management liability exposures and rising claims have increased the focus on effective D&O policies backed by effective D&O insurance carriers, ensuring company directors and officers are adequately covered for these risks. Amid continuing economic uncertainty, company directors and officers (D&Os) are under increasing pressure to keep their businesses profitable and continue making returns to shareholders. At the same time, business leaders must tackle challenges including higher regulatory burdens, increasing cyber risks, supply chain issues, costs related to changing inflation and interest rates and continued volatility due to geopolitical tensions. Leadership accountability The leadership team’s role as custodians of the company’s success and reputation means they may be liable for any adverse outcomes resulting from decisions made in the course of their professional duties. With D&O insurance policies designed to cover liabilities incurred due to their decision-making, executives can secure financial protection against the cost of defending legal claims brought against them. This coverage has become increasingly important as businesses face rising levels of litigation – from regulators, employees, company shareholders and other third parties. The growing challenges for businesses Increased regulatory scrutiny across territories and industries has coincided with a growth in litigation funding for actions brought against corporate defendants – a phenomenon that is becoming more prominent internationally. Alongside this, securities class actions are increasingly more common outside their traditional heartland in the U.S., with these types of cases being brought in the UK, European Union and the Asia-Pacific region. The growth of cyber crime activity, particularly ransomware attacks, across multiple industry sectors is also a significant potential area of exposure for D&Os and their insurers. Data loss and threats to client data privacy, business interruption, supply chain risks, and reputational damage resulting from cyber attacks can result in legal action if business leaders fail to implement an effective cyber security strategy. It is therefore essential for the board and executives of insureds, as well as their insurers, brokers and other professional advisors, to continually re-assess the D&O risks faced in this dynamic and evolving risk landscape. Managing an evolving risk landscape The global D&O insurance market has experienced significant fluctuations in the past decade, driven by a combination of increased regulatory activity and economic uncertainty. When faced with a risk landscape that is growing in scope and complexity, companies are seeking greater security from their insurance partnerships. They are looking for carriers who can help them to both identify and mitigate the risks to their businesses and leadership teams, as well as indemnifying them against the costs of defending against legal actions, should the worst happen. This means partnering with a carrier who has lengthy underwriting experience, extensive in-house expertise in managing global D&O risks and structuring tailored insurance solutions, fast and efficient claims processing, and who can provide consistent and meaningful levels of capacity. In this environment, where the D&O market has recently been challenged by increased claims activity and growth in larger claims notifications, experience matters. AIG draws on 40+ years of industry knowledge, resources and data to offer innovative liability solutions and serve as a reliable and trusted provider to our clients. Helping them to navigate a changing market and enable business leaders to perform to the best of their abilities. As regulatory activity is being stepped up across the world, AIG’s multinational capabilities enable us to support international clients with global exposures by offering consistent D&O coverage and claims handling capabilities across more than 200 countries and jurisdictions.
