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Challenges using non-admitted insurance for directors and officers abroad

Challenges of non-admitted insurance for D&O risks in international companies include legal, regulatory, and financial exposures impacting directors and officers abroad.
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By Jennifer J. O'Neill, Esq. , 

Multinational Leader, Marsh FINPRO

01/20/2026 · 2 minute read

As companies expand their global footprint, the governance of international subsidiaries often involves directors and officers serving on boards in multiple countries. While many organizations rely on non-admitted insurance policies issued outside the host country to provide coverage for these senior leaders, purchasing a directors and officers liability (D&O) policy on a non-admitted basis can present significant challenges and risks for both the company and its executives.

What is non-admitted insurance?

Non-admitted insurance policies are issued by insurers that are not licensed or admitted in the jurisdiction where the risk is located. These policies are often part of a global or master insurance program designed to provide broad coverage across multiple countries without the need to purchase separate local policies.

Key problems with non-admitted coverage for D&O risks

There could be a number of challenges related to relying on non-admitted D&O coverage, including:

  1. Legal restrictions on claims and defense costs payments

    Many countries prohibit or restrict the use of non-admitted insurance to pay for claims or advance defense costs within their jurisdiction. This means that even if a global D&O policy covers a claim, the insurer may be legally barred from making payments or advancing defense expenses locally. For directors and officers, this can result in significant out-of-pocket costs and financial exposure.

  2. Uncertainty around indemnification and advancement rights

    In jurisdictions where corporate indemnification and advancement of defense costs are unclear or limited, directors and officers rely heavily on their insurance coverage. Non-admitted policies may not provide the necessary local support to ensure timely advancement of defense costs, leaving executives vulnerable during investigations or litigation.

  3. Regulatory and compliance risks

    Using non-admitted insurance can trigger regulatory scrutiny and potential penalties. Some countries impose strict rules on insurance placement, including premium taxes and reporting requirements. Failure to comply can lead to fines, invalidation of coverage, or reputational damage for the company.

  4. Limited local claims handling expertise

    Non-admitted insurers do not have a local presence or claims teams familiar with the jurisdiction’s legal and regulatory environment. This can delay the resolution of claims and reduce the effectiveness of defense strategies. Aside from potentially not being able to front defense costs, directors’ and officers’ personal assets may also be at risk if they are unable to adequately defend against a claim.

  5. Impact on board recruitment and retention

    Qualified directors and officers are increasingly aware of the risks of serving on boards without adequate local insurance protection. The absence of admitted local coverage can deter experienced professionals from accepting board positions, potentially impacting governance quality.

Limitations of non-admitted coverage 

There are several instances when it is prudent to consider a standalone, country-specific D&O insurance program, including when operating in:

  • Countries that prohibit non-admitted insurance or have strict regulatory controls.
  • Jurisdictions with unclear or limited indemnification laws for directors and officers.
  • Situations where defense costs must be advanced promptly to avoid personal financial hardship.
  • Markets where local premium taxes and compliance requirements are significant.

Mitigating the risks through local admitted policies

To address these challenges, companies should consider supplementing their global D&O programs with locally admitted policies in key jurisdictions. Among their benefits, local policies:

  • Allow the company to remain compliant with local insurance laws and tax regulations.
  • Provide guaranteed advancement of defense costs and claims payments within the jurisdiction.
  • Offer access to local claims handling expertise and legal resources.
  • Enhance confidence among directors and officers, supporting board recruitment and retention.

While non-admitted insurance policies offer convenience and broad coverage, they may not adequately protect directors and officers serving on boards in foreign countries. The legal, regulatory, and practical limitations of non-admitted coverage can expose executives to significant personal risk and complicate claims handling. Incorporating locally admitted D&O policies into a multinational organization’s global insurance strategy is essential to safeguard directors and officers, remain compliant with local laws and regulations, and maintain strong governance across international operations.

Specialists within Marsh’s FINPRO Practice have the multinational expertise to help you design a program tailored to your specific needs.

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