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Directors & Officers (D&O) Liability

Public, private, and non-profit companies face complex exposures, which can make their directors and officers targets of litigation. Marsh can help clients develop innovative risk transfer solutions that offer critical protection.

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Company directors and officers (D&O) cannot reduce the complexity of the business, legal, and regulatory environment. What they can do, however, is take steps to protect their own personal assets — through a combination of strong corporate governance, broad corporate indemnification, and a risk transfer program that includes a high-quality D&O liability insurance program.

Our management liability team advises companies of all sizes on their liability insurance coverage and provides solutions that can protect clients where a strategic initiative requires a more targeted approach.

Our capabilities include:

  • directors and officers liability insurance; 
  • employment practices liability; 
  • private equity owned portfolio companies; and 
  • public offering of securities insurance.

FAQs

Liability exposures can vary for directors and officers of public companies and those at private or non-profit organisations.

Public company directors and officers typically face more scrutiny of their management decisions due to regulatory and legal requirements to disclose financial and operational information. Securities lawsuits by shareholders or regulators are a common type of D&O risk for public companies.

While private and non-profit organisations do not have the same disclosure requirements, they nevertheless can face lawsuits alleging wrongdoing or harm from customers, vendors, regulators, or other sources. Employment practices lawsuits, rather than securities claims, are a common exposure for private companies and non-profits.

Directors and officers of all organizations, however, can face liability exposure for cyber-related losses, such as data breaches, among other things.

D&O liability insurance typically contains three sections, often referred to as "sides." Each side provides a different coverage component, making it critical to understand all three:

  • Side A: Often called "personal asset protection," Side A D&O is solely for directors and officers. This coverage is triggered if the organisation is unable or unwilling to indemnify them. This element of coverage can be critical in order to attract qualified directors and officers.
  • Side B: Known as "company reimbursement" coverage, Side B insures your organisation for the covered costs of indemnifying your directors and officers.
  • Side C: Also called "entity" coverage, Side C offers balance sheet protection when the organisation itself is named in litigation. This is generally limited to securities claims for public companies.

Various movements and stakeholders are promoting corporate accountability for environmental, social, and governance (ESG) activities. These often shine a spotlight on organisational practices, including:

  • Operations with high-carbon emissions
  • Use of renewable energy sources
  • Human rights and labor practices in developing countries
  • Board diversity
  • Responsible investment strategies
  • Executive compensation

This can add accountability pressure on directors and officers for the impact of their decisions, which could lead to regulatory and legislative action, litigation, or force a business to amend its plans and practices.

Our people

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Craig Claughton

Chairman, Financial and Professional Services, Pacific

  • Australia

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Richard Garside

Head of Financial and Professional Services, Pacific

  • Australia

“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”