It focusses on the increasing number of businesses that are considering utilising subsidiaries as the main policyholder on a non-admitted basis, when seeking global directors and officers (D&O) liability cover. In such cases there are a number of important legal and compliance considerations to be examined.
Rules determining whether an insurer can underwrite D&O cover in a country where it is not licenced vary from jurisdiction to jurisdiction and in some cases it is strictly prohibited. Financial Interest Clauses are sometimes employed as a solution, but their use can be limited, particularly in the D&O context.
Chris Jones, Director of Legal, Underwriting and Claims at the IUA, said: “Our guide is designed to highlight questions that firms should ask to ensure that they receive the D&O coverage they require and expect. There are many countries, for example, where insurers would face challenges in seeking to pay D&O claims if they are not licensed or admitted locally.”
Tax issues highlighted in the guide include the potential liability for premium taxes to be paid in each country where there is a covered subsidiary for multinational policies.
Also listed are a number of possible coverage limitations. Since, for example, cover for the directors and officers of subsidiaries under a D&O policy is typically linked on the listing of the parent company as the policyholder, the naming of a subsidiary of a parent company as a policyholder could result in there being no cover for the directors and officers of the parent company and/or some or all of a parent company’s subsidiaries.
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