Do global private companies need D&O coverage?

Private companies often purchase directors and officers liability (D&O) coverage solely for the parent organization, sometimes overlooking the unique risks faced by their smaller international entities.

But while many D&O policies include worldwide coverage, they may not fully address the specific regulatory and operational challenges of global subsidiaries. For example, some countries prohibit coverage under policies issued to the parent organization due to restrictions on non-admitted insurance. Others may allow such coverage but impose local premium taxes that must be paid for the policy to be valid.

Given these complexities, it is critical to assess each country’s regulatory environment to determine if a local D&O policy is necessary, allowing the organization to secure comprehensive protection across the entire global footprint.

Evaluating the need for a locally admitted D&O policy

When a private company is extending a D&O program internationally, a number of key factors come into play, including:

Nature of overseas operations: What activities are conducted abroad? Understanding the scope helps assess risk exposure.
Regulatory scrutiny: Are operations subject to heightened oversight or industry-specific regulations?
Local legal environment: What are the laws and regulations governing directors and officers in each jurisdiction?
Indemnification rights: Does the country permit indemnification and advancement of defense costs for directors and officers?
Local claims support: Is having an insurer with a local presence important to effectively manage claims and investigations?
Tax compliance: Are there local tax obligations related to insurance premiums that must be met to avoid penalties?

Claims against private companies operating internationally often stem from employees, regulators, lenders, consumers, or safety concerns. Having a D&O policy tailored to the local entity’s needs is essential — not only to protect directors and officers but also to attract qualified board members who expect appropriate local coverage.

In summary, a thoughtful evaluation of your global D&O program is vital to safeguard your entire organization and support its international growth.

The specialists within Marsh’s FINPRO Practice have the multinational expertise to help you design a program tailored to your specific needs. For more information, contact your Marsh representative.

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Do global private companies need D&O coverage?

Evaluating the need for a locally admitted D&O policy

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Do global private companies need D&O coverage?

Evaluating the need for a locally admitted D&O policy

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