If a D&O Claim Was Made Against Your Business, What’s Next?

These claims could be made under a D&O policy:

• Against business leaders for the actual or alleged wrongdoing while managing a company

• Failure to have a safe and secure workplace relating to poor employment and human resources practices

• Not complying with regulations and laws

• For losses or bankruptcy due to mismanagement, operational failures or breach of fiduciary duty

• Poor or a lack of corporate governance

• Making decisions without the required authority

• Your company or stock’s underperformance

• Poor practices leading to cyber security issues and data breaches.

Here’s who can lodge such claims:

• Supervising board

• Employees and third parties such as

• Regulators, unions, state authorities

• Competitors, customers, suppliers

• Creditors, banks, investors

• Liquidators

• Shareholders.

Step 1: Notify us

Once you’ve notified us, we’ll promptly notify the insurer. Then they will ask for clarification about the facts surrounding the claim. As a policyholder, you have a duty to cooperate to help the insurer investigate the claim.

Step 3: Determining the deductible

We’ll work with you to determine the deductible, also known as an excess, under your policy terms and conditions.

This exercise happens where the director or officer is subject to a writ, official notice or demand for compensation.

Step 4: Advancement of defence costs

Ideally, your D&O policy will not have a sub-limit for defence costs, and it should allow for those costs to be automatically advanced when we notify a claim. That advance should cover you until that insurer rejects the claim, including if it concerns alleged misconduct yet to be admitted or proven.

Securing your defence costs in advance means you won’t be out of pocket until the insurer reimburses your company for those costs.

Conclusion

While D&O insurance offers a layer of risk protection for your business, directors and officers are in a more challenging position these days, according to Governance Directions. It points to a significant shift in what’s considered prudent and balanced governance.

Aim to manage in line with community expectations and the circumstances and economic environment in which you operate. Meanwhile, we’ll be here as your guide and support for maintaining a strong risk profile, and to help with claim processing.