D&O insurance protects directors, officers and companies through indemnification when they are found liable for legal misconduct, errors, or allegations made in connection with their management decisions.
How does a D&O policy help?
- Protects personal assets from exposure in management-related misconduct.
- Covers indemnification costs for directors and officers.
- Limits the company’s balance sheet exposure in a D&O lawsuit.
Directors and officers insurance typically responds in three coverage sections — Side A, B or C — as outlined below:
Cover |
How D&O insurance protects directors, officers and the company |
Side A |
Individual D&O insurance: Covers directors and officers personally when the company is unable or unwilling to indemnify them, such as during insolvency. |
Side B |
Directors' indemnity insurance: Reimburses the company for costs paid on behalf of directors or officers, including legal defence costs, settlements, and judgments. |
Side C |
Entity cover for securities claims: Protects the company when named in litigation, operating as balance sheet protection. |
While understanding how each coverage section responds is an important starting point, organisations should also assess their overall D&O risk exposure and coverage requirements carefully. Policy wording can significantly influence how a claim is handled in practice and working with a trusted broker who has both local and international D&O expertise can help organisations secure cost-competitive rates with the right level of protection.
Why Marsh
At Marsh, clients trust us to place more than US$100 million in D&O insurance premiums each year. We manage one of the largest D&O portfolios in Asia, covering around 30% of the Hang Seng Index and 50% of the Straits Times Index, giving us the scale to help you secure cost-efficient coverage aligned with your needs and risk profile.
FAQs
1. Is D&O insurance mandatory in Philippines?
No. D&O insurance is not typically a legal requirement in the Philippines. As of 2026, only 15% of around 250 publicly listed enterprises in the Philippines have D&O coverage for their top executives. However, it must be noted that under Philippine law, the personal assets of directors and trustees are not shielded from liabilities arising from gross negligence, bad faith, or violations of fiduciary duties. Multiple government bodies such as the Securities and Exchange Commission, the Bureau of Internal Revenue, and the Philippine Competition Commission, among others, maintain tight scrutiny over the private sector, making D&O insurance a prudent choice for businesses in the Philippines.
2. What drives the cost of D&O insurance?
D&O insurance premiums are shaped by your company's industry, claims history, board structure, and the limits and retentions you choose. However, price should not be assessed in isolation. Policy wording matters as much as price: A lower-cost D&O policy with narrow triggers or broad exclusions can leave significant coverage gaps when a claim is made.
3. What happens to D&O cover during an M&A or wind-down?
Directors and officers can remain personally exposed to claims relating to decisions made before a sale, merger, or wind-down, even after the original policy ends. Run-off cover extends D&O protection for a defined period after such an event, so directors are not left unprotected once the deal closes.
4. Does D&O insurance cover regional directors or officers who work across multiple markets?
Yes, though multinational coverage needs to be structured carefully. Insurance regulations vary by jurisdiction, and several markets in Asia require locally admitted policies rather than a single cross-border policy. Organisations with directors and officers operating across the region typically need a coordinated regional program, with a master policy supported by local policies, so that directors stay protected and compliant wherever they are based.
5. Does D&O insurance cover former or retired directors?
Most policies continue to protect former directors for alleged acts committed while they held office, provided the claim falls within the policy's retroactive date. During renewal, organisations should review the definition of "retired director" with their broker as well as run-off options if the company is later sold or wound down.
6. How does D&O insurance differ from Professional Indemnity (PI) insurance?
D&O insurance protects directors and officers personally for claims relating to management and oversight decisions. PI insurance protects the company and professionals for claims arising from the professional services or advice they provide to clients. Organisations in professional or advisory industries, where both exposures are common, often carry both covers side by side, since neither substitutes for the other.
7. What are the standard exclusions in a D&O policy?
Standard D&O policies commonly exclude claims involving proven fraud or dishonesty, conduct that knowingly breaches the law, circumstances known before the policy began, and disputes between insured directors of the same company. Working with a broker who can negotiate tighter exclusion terms is key to ensuring your D&O policy responds when it matters.