In response to changes in insurance regulations and more stringent corporate governance requirements worldwide, the Chubb Group of Insurance Companies has introduced a Difference in Limits/Difference in Conditions (DIL/DIC) Multinational Directors and Officers Liability form.
Available to U.S. corporations that have purchased a Chubb D&O policy, the form can provide excess coverage and bring local D&O policies up to U.S. coverage levels, where permitted by law.
“As more companies expand their operations outside the United States, their exposure to a directors and officers liability lawsuit may increase. These companies may find it challenging to comply with the varying insurance laws in each country,” said Jim Bronner, senior vice president, Chubb & Son, and chief underwriting officer for Chubb Specialty Insurance.
Chubb’s 2007 International Risk Survey found that three out of four respondents indicate their company is likely to expand their operations outside the United States and Canada this year. More than half of the respondents (55%) noted that D&O liability is becoming a more significant source of risk outside the United States and Canada.
“Many European and Asian countries have established higher standards of corporate governance and regulations that make it easier to sue a company’s directors and officers. While the current trend in D&O litigation outside the United States is primarily focused on larger companies, U.S-based companies of every size should proceed with caution when conducting business across borders,” Bronner said.
From an insurance regulatory standpoint, Bronner explained that some countries, such as Brazil, require foreign companies that wish to protect their local subsidiary’s directors and officers from litigation to purchase a locally-issued D&O insurance policy. In addition, Romania is the first country in the European Union to make locally-issued D&O insurance compulsory. “However, in these instances, a local policy may not provide the breadth of coverage required by many U.S.-based companies,” Bronner said.
Source: Chubb Group of Insurance Companies
Was this article valuable?
Here are more articles you may enjoy.