5 Observations on Directors’ and Officers’ Liability Insurance

Insurance Brokers | Griffiths & Armour

In an already hardening Directors’ and Officers’ Liability (D&O) insurance market, it is becoming increasingly difficult to secure such cover during the COVID-19 pandemic. The market has reacted adversely to certain business sectors that they now perceive as being higher risk in the future, with PLCs and businesses with global exposures also falling into the higher risk category.

What is D&O Insurance?

D&O insurance policies offer liability cover for the actual or alleged wrongful acts of individual company managers in order to protect their personal assets from claims which may arise from the decisions and actions taken within the scope of their regular duties.

Historically, the proportion of consultancy practices who chose to insure such risks was relatively low.

So, what is changing?


Over the last 12 months we have seen the following developments in D&O for our existing clients:

  1. Reduced insurer capacity, resulting in more insurers being involved for some clients to provide the same Limit of Indemnity to maintain continuity of existing levels of cover.
  2. Premium rate increases for both primary and excess layer insurance policies.
  3. Insurers looking to change policies to Aggregate cover rather than Each and Every claim.
  4. More extensive review and assessment of company financials, including latest management accounts, in addition to the last audited report and accounts.
  5. Specific enquiries relating to the impact of COVID-19 on the business and/or any corrective measures taken.

What impact will COVID-19 have on D&O Insurance?

COVID-19 has and will continue to present unique challenges for businesses, directors and management teams in making critical decisions on behalf of clients, colleagues, and other stakeholders in addition to complying with legal and compliance obligations.

All business activities, including contingency and continuity plans, will be under focus for the months ahead as businesses navigate their way through the aftermath of the disruption caused by the pandemic. These decisions could potentially result in litigation, with actions brought by: employees for injury or breaches of employment practices law; shareholders; investors; or other stakeholders and regulators of the type that D&O insurance can often provide cover for.

It is predicted that there will be a large amount of COVID-19 related claims from a range of sources including investors, customers and employees who are unhappy with the way a company has handled their interests during the crisis. As well as this, it is predicted that the number of insolvencies will rise sharply and further contribute to the financial impact of this pandemic.

Advice for businesses seeking D&O cover

As we navigate through 2020 and beyond, we predict that the financial lines market will only become more challenging. It is no longer prudent to presume that the renewal of your financial lines products will be secured easily and quickly.

The impact of the current market conditions on the availability and cost of cover for your renewal will vary depending on many factors including your:

  • financial profile,
  • trade sector / professional discipline, and
  • strategies for risk management.

The current climate means that the vast majority of businesses will be subject to increasing premiums, higher retentions and cover restrictions. It is important to work with an experienced insurance broker that has global capabilities and who can work with you to find the best solution.

At Griffiths & Armour, we provide more than just advice about an insurance policy. Our team  works closely with you to manage your risks and offer you support when you need it most. Our wealth of experience in sourcing D&O insurance across a wide range of industries both in the UK and globally, and our technical expertise and knowledge provides the necessary trust and understanding of the insurance market that enables us to be best placed to negotiate the right cover on your behalf.

To find out more about Directors’ and Officers’ insurance please get in touch with your Griffiths & Armour broker or you can contact Ken Harris by clicking below.

Ken Harris | Griffiths & Armour