Growing enterprises in Asia have been experiencing a substantial rise in pricing and renewal rates for directors and officers (D&O) liability insurance, alongside increasingly limited coverage terms. The trend is driven by evolving exposures to people risks (such as employment lawsuits), M&A risks, rising insolvencies, as well as an increase in litigation and claims in the region and globally.
There has also been an increase in liability suits filed by companies against individual D&Os. These suits are often "event-driven" as a result of the failure of senior D&Os to adequately respond to high-profile events and trends. Such events include cyberattacks, climate change, and allegations of misconduct.
In some cases, a company’s senior leaders could find themselves having to pay a significant portion of settlement and legal costs out-of-pocket.
With companies facing growing scrutiny on every aspect of their businesses from regulators, investors, shareholders, customers, and employees alike, D&O insurance can offer organisations and their senior leaders comprehensive and cost-efficient coverage against unexpected claims and litigation.
How does D&O insurance work?
Directors and officers liability insurance protects your company through indemnification should your directors and officers be found liable for legal misconduct, errors, and allegations.
D&O insurance works in three simple ways:
- By protecting personal assets from potential exposure in management-related misconduct.
- By covering the cost of indemnifying directors and officers.
- By limiting the liability to the company's balance sheet in a lawsuit.
The image below illustrates the different levels of protection that can be chosen based on your business needs:
Blue Series D&O wording: Broader protection and greater claims certainty
Policy wording has a big influence on how D&O insurance responds when a claim arises. In addition to standard D&O wording, Marsh Risk offers Blue Series D&O wording, an enhanced policy wording developed for organisations with more complex risk profiles or a stronger focus on claims certainty. Available exclusively through Marsh Risk, Blue Series D&O wording delivers broader coverage, clearer triggers and more structured claims protocols to help organisations reduce uncertainty and improve claims outcomes.
How our Blue Series wording enhances D&O insurance coverage
|
Standard D&O wording |
Blue Series D&O wording |
Insuring clause triggers |
May not trigger in the event of an allegation of wrongdoing due to policy language technicalities. |
Clear, all-inclusive triggers enable earlier policy responses and payments in the event of a D&O claim. |
Policy exclusions |
Typically ranging from 10 to 12 exclusions. |
Two base exclusions. |
Claims protocol / Defence counsel arrangements |
Appointment processes and fee structures may differ depending on insurer and policy terms. |
Buyer-friendly, pre-agreed defence counsel panels and structured bilateral approval processes, with defined fee and scope parameters to support smoother coordination. |
Entity cover for investigations |
Largely unavailable unless specifically agreed and endorsed, and often requiring additional premium. |
Built-in as standard insuring clause cover, including affirmative cover for climate disclosure investigations. |
Availability |
Available as part of standard D&O insurance placements. |
Available exclusively through Marsh Risk. |
To accurately assess risk exposure and obtain a cost-competitive rate with sufficient coverage and protection, it’s advisable to work with a trusted and experienced insurance broker with both local and international expertise in D&O coverage.
Why choose Marsh
At Marsh, clients have trusted us to place more than US$100 million of D&O insurance premium per year on their behalf. 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. We can help you assess and bridge your D&O protection gap by securing cost-efficient insurance coverage that is optimised for your needs.
To discover the appropriate D&O insurance coverage for you, Marsh offers free benchmarking that gives companies and their risk professionals access to predictive modelling capabilities. Estimates of potential claim frequency and severity can be used to analyse potential limit and retention structures, which enables insight into projected average net losses and the volatility associated with each coverage option.
The analysis from the benchmarking report can ensure that your business purchases the right amount of coverage and gets the full value out of D&O insurance programs.
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