Directors’ Liability Survey Reveals Top Executive Concerns

Executive Risk D&O

The second annual Willis and Allen & Overy survey of Directors’ Liability and coverage concerns is hot off the press. As was reported in today’s Financial Times, we polled approximately 130 directors, general counsel, risk experts and compliance professionals in large public and private companies. 

The report is full of interesting information.

We launched the survey at a joint seminar which took place in London on Wednesday 17th April. In opening the event I read out these rather chilling words of Martin Wheatley, the new head of the Financial Conduct Authority (“FCA”) which seemed apt to place the findings of our report into the current context and climate:

Accountability to justice systems and to customers is what matters. We could put up fines three times, five times, ten times greater – it will not make a difference unless individuals are held to account.

Here is the summary of some of the findings which I found most striking:


More than one in four respondents to our survey has had experience of a claim or investigation involving a director of their company. It is often thought that D&O liability insurance (at least outside the US) is a low-incidence type of protection albeit that when there is a claim, the amounts involved can be considerable. Our survey seems to suggest otherwise. I suspect there may in fact be a correlation between this finding and the fact that no less than 83.9% of those polled regarded regulatory and other investigations and enquiries as their number one concern. As Mr. Wheatley’s quote shows, regulators are focused as never before on personal accountability. Although the majority of regulatory investigations are conducted confidentially (at least in the preliminary stages) and even though a high proportion may not ultimately result in proceedings or prosecutions, they nevertheless appear to be having a discernible impact on our respondents.

Fear of Claims

Whereas last year, concern over employment practice liabilities featured among the top three liability concerns, in this year’s survey it was replaced by the fear or securities/shareholder claims (51.2%). That figure in turn correlates very closely to the 49.6% of those polled who expressed concerns about the risk of being sued abroad. Whilst the threat of involvement in US securities claims may have receded somewhat in light of the Supreme Court decision in Morrison v National Australia Bank [ link ], managers may now have a better understanding of the risks they face in relation to such claims from other jurisdictions including Canada, Australia and the Netherlands.

Criminal Prosecutions

One area where there is a striking disparity in the report’s findings relates to the fear of criminal prosecutions. Concerns expressed around liability in relation to anti-corruption legislation were high at (63.2%) whereas the equivalent concerns in relation to anti-trust enforcement were only at 35%. As John Terzaken, a partner in Allen & Overy’s Washington office made clear at the launch event, there are in fact over 120 countries with anti-trust laws and some of them including Brazil, Australia, China, India and Canada are vigorously pursuing recoveries of substantial fines and penalties. You can access John’s interesting slides on that subject here.

D&O Policy Coverage

When it comes to D&O policy coverage, the number one concern among those polled is that there should be “clear and easy to follow policy terms and conditions” (64.2%). This is a subject close to my heart and I can’t help thinking that the result highlights the fact that we should be doing more as an industry to simplify and explain our products. On this and due to popular demand we recently re-ran the Keith Packer seminar [link] in front of another large audience. At the event, a senior insurer expressed the view that policies were moving in the direction of becoming more accessible and comprehensible. I would like to think that was right but am not sure I necessarily share that view. I would welcome readers’ thoughts.

The full survey can be downloaded here.

About Francis Kean

Francis is an Executive Director in Willis Towers Watson's FINEX Global, where he specializes in insurance for Dir…
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