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05 october 2021
3 min.

D&O Liability Insurance. The Ukrainian companies more often began to insure the directors and officers liability

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The number of applications from Ukrainian companies for Directors and Officers Liability (D&O) increased by 20%, as reported Nadiya Guziy, a specialist of the Underwriting Department of INGO Insurance Company.

According to her, this type of insurance is in demand primarily in state-owned and critical infrastructure enterprises, as the management of such companies may critically affect the functioning of a particular city or region and the country as a whole.

By insuring the liability of directors and officers, the company can indemnify for the financial losses caused to third parties due to the lack of director’s care or skills.

The shareholders, employees, environmental groups, regulators, creditors, banks, customers, suppliers, customs - all these are potential claimants against directors. The regulators and shareholders mostly file claims worldwide. For example, the latter often sue for negligent activities resulting in a fall in the company's share price or insolvency. Users (clients) - for distortion or falsification of information. The new board of directors can file claims against former managers due to the wrong decisions. The company employees are often sued for discrimination or wrongful dismissal.

For such a wide range of claims, D&O liability insurance provides a coverage consisting of two parts - Side A and Side B.

Side A is the coverage of individual or non-recoverable damages. This part provides indemnification for the damages resulting from possible wrongful acts of a particular director or officer, if the company does not want or cannot indemnify for such damages. Without this coverage, the personal assets of the guilty person may be confiscated or may not be sufficient to fully settle the claim.

Side B is the indemnification for the company's expenses. Such coverage applies where the company can and is willing to indemnify for the individual director or directors for the damages for their alleged wrongful acts. This part of coverage indemnifies for the company's expenses and can be considered as a protection of the balance sheet.

The coverage typically applies to all current, future and past directors, officers and employees who perform management or supervisory roles in the company and its subsidiaries. The contract may also cover the liability of non-executive directors.