Do you require Directors and Officers Insurance?

In today’s business climate of corporate transparency and accountability, an organisation’s officers and directors face a myriad of employment-related exposures. Claims can come from many sources, employees, regulators, shareholders, creditors, customers, etc. Ever-changing regulations, increased employee awareness of employment rights as well as the rise of shareholder activism means directors are more frequently at risk, translating to rising claims and escalating settlement costs.

In the wake of recent unprecedented corporate scandals, clearly the trend of corporate accountability applies to large corporations. But smaller privately held companies, including not-for-profits, are not exempt from litigation arising out of the management decisions of their boards. They, too, are at risk.

Regardless of your company’s size, the legal cost to defend a director is substantial, as are the potential penalties that can be personally incurred. Due to liability risks, protecting boardroom talent can be a challenge. To help ensure both your officers’ as well as company’s well-being, a directors’ and officers’ liability insurance (D&O) policy is part of a comprehensive risk financing strategy.

D&O Fills the Cover Gap

Unlike liability policies that provide cover for claims arising from property damage and bodily injury, a D&O policy specifically provides cover for a ‘wrongful act’, such as an actual or alleged error, omission, misleading statement, neglect or breach of duty.

For example, a manufacturer told one of its suppliers to increase inventory because they were expecting a large increase in production. As predicted, demand for the manufacturer’s product grew but the manufacturer increased its inventory with another supplier instead. The original supplier successfully sued the manufacturer, alleging they suffered damages as a result of having relied on the manufacturer’s promise.

A D&O policy provides defence costs and indemnity cover to the entity listed on the policy declarations, which may include:

  • cover for individual directors and officers;
  • reimbursement to the organisation for a contractual obligation to indemnify directors and officers that serve on the board; and
  • protection for the organisation or entity itself.

Indemnification provisions are typically included in the charter/bylaws of a company. While an important risk component, small to medium-sized enterprises or not-for-profit organisations often do not have the financial resources to fund the indemnity provisions, making the bylaws hollow. A D&O policy can provide an extra blanket of security in the event of a covered loss.

A ‘fraud’ exclusion is typically included in a D&O policy, which eliminates cover for losses due to dishonest or fraudulent acts or omission or wilful violations of any statute, rule or law.  D&O cover can be tailored to your needs but be aware that D&O insurers are not consistent with their policy forms. This fact, plus the complexity of D&O claims, requires the insurer to have market commitment and deep expertise as well as the financial resources to handle potential claims.

There are also additional forms of cover to adequately protect directors and officers, including:

  • entity cover;
  • payment priority for insured persons;
  • severability of the insured as well as severability of the application;
  • cover over time, meaning cover responds to past, present and future directors and officers;
  • pay on behalf clause; and
  • duty to defend clause

Consideration for Not-for-Profits

Many not-for-profit organisations with directors and officers often report some difficulty in affording the cost of D&O insurance. To minimise the costs, brokers should recommend choosing only those policy provisions considered most critical. For example, a volunteer-run not for profit without paid staff may skip employment practices cover until it hires staff. To defray the cost of premiums, some not-for-profit organisations consider charging board members a portion of the policy cost.

We’re Here to Help

Whether you are a not-for-profit, privately held or a public company, it is likely that your business can benefit from a D&O policy. Since there is no such thing as a ‘standard’ policy, a professional broker is invaluable when purchasing D&O cover. We understand your organisation and can knowledgeably help design policy language to meet your needs. Call us today at 01277 844 360 to learn more about the appropriate protection for your company against potential directors’ and officers’ liability.

Introducing Direct Insurance Corporate Risks

After months of hard work, we are delighted to officially announce the launch of our website. You can now find us at

Our goal with this new website is to provide our visitors with an easier way to learn about what we do at Direct Insurance Corporate Risks, what solutions we offer and how we can help to save you money on your insurance premiums.

You might have also noticed that we’ve changed our name, don’t worry we’re still part of Direct Insurance Group. The business has seen significant growth, including the continued success of our Lloyd’s business, Direct Insurance London Market, therefore the name change is to help bring more clarity with regard to our relationship with you – our corporate client.

The new website includes all the useful information you’d hope to find, information on what we do, where we’re based and how to get in touch. Amongst the new features, the site contains integrated social media buttons for Facebook, Twitter and LinkedIn to foster improved communication with our clients. We will be constantly updating our content with helpful information, articles, blogs, newsletters, company announcements and client successes.

We hope you find the new website fresh and modern; we worked hard to make sure it contains valuable information to help you with all your insurance needs.

For any questions, suggestions, feedback or comments, please E-mail us at or speak to your Account Executive.

Direct Insurance Corporate Risks

Direct Insurance Group Plc targets growth in the facultative property reinsurance sector

Direct Insurance Group plc (DIG), has appointed James Potter to spearhead its new Underwriting vehicle, Rokstone Underwriting.

Rokstone Underwriting is a specialist MGA, serving the needs of international (re)insurance brokers, in speciality lines of business. This development will enable Rokstone to offer many classes of business but in particular Property Reinsurance, for a wide range of occupancies from single locations through to multinational programmes, consistent with its overall strategic growth ambitions.

Rokstone’s specialist Property team will operate from its London Headquarters and are able to write general property and onshore energy business on a primary, quota-share and excess of loss basis.

Potter, joins Rokstone with more than 20 years of industry experience, most recently as Head of DIG’s Lloyds cover holder business. Potter is also joined by former Lloyds Underwriter, Paul Hallinan, previously, Class Underwriter at Talbot Syndicate.

David Bearman, CEO of Direct Insurance Group, said: “This is an extremely exciting venture. We have built a team of specialist underwriters, with the highest levels of underwriting authority who are able to make decisions quickly.”

Direct Insurance Group Plc appoints new HR manager

Direct Insurance Group Plc (DIG), one of the UK’s leading commercial insurance brokers, has appointed its new human resources manager.

Kerry Johnson brings to the company over 10 years of HR management experience. She joins from Earnest Doe & Sons in Essex where she was human resources manager, responsible for implementing a number of HR initiatives whilst also managing day-to-day recruitment, organisational development, and training strategies.

DIG appoints Johnson after significant growth, which saw the company enjoy a 33% increase in staff in the last twelve months.

This growth has been driven across all areas of the business by an increase in schemes development, namely the Direct Insurance London Market, BIBA endorsed Environmental Contractors scheme, also as part of its Latin American growth drive and its dedicated boost to the sports and leisure sector via its MGA, Imperium Insurance Management.

David Bearman, CEO of Direct Insurance Group plc, welcomed Johnson’s appointment.

“We’ve had a very successful year and remain committed to maintaining and developing our recruitment and training initiatives to keep pace with our growth now and in the future. Kerry’s appointment reinforces that commitment.”