STATISTICS:

ALLIANZ: New-age corporate leaders are facing new and higher risks

"Rapidly changing risks and increasing compliance requirements mean corporate leaders are under scrutiny over alleged wrongdoing as never before. There are a growing number of areas that can result in a company and its directors being sued," states the recently issued D&O Insurance Insights - Management liability today: What executives need to know report by ALLIANZ.

Here are some of the most interesting findings of the report with regard to:

Emerging Risks

Executive liability exposures are becoming more complex and interconnected. Many large claims involve regulatory investigations and civil litigation in multiple jurisdictions. Emissions testing problems in the automotive industry are an example of a potentially systemic commercial D&O loss. Meanwhile, the Panama Papers leaks illustrate how a data breach can impact professional service providers and financial institutions, which could in turn spark multiple claims across several jurisdictions.

There is an enhanced focus on supply chain management. Emerging risks such as modern slavery, environmental pollution and climate change-related disclosures could result in reputational risk and shareholder activism, public outcry or governmental investigation. Activists are increasingly targeting companies and directors for not disclosing environmental data or risks to investors.

Data protection rules
around the world are becoming increasingly tough as government agencies bolster cyber security. This significantly impacts businesses; penalties for non-compliance are increasingly severe.

A serious cyber incident can result in reputational and financial damage, as well as regulatory action. In more extreme cases a cyber security breach could cause a company's share price to drop.

In future it may be possible to claim substantial damages from directors if there has been negligence in any failure to protect data or a lack of controls. There is currently uncertainty around the issue of directors' cyber liabilities but it is likely that someone will make a successful argument that a director was negligent or had not paid sufficient attention to cyber security in future.

There are a wide range of scenarios in which a director could be considered negligent, such as a fund transfer fraud or where a vulnerable network is comprised, leading to significant business interruption, property damage or loss of intellectual property. Directors' cyber exposures are likely to grow further with increasing reliance on technology. Technology, data and algorithms can become corrupted. For an analyst using predictive models to advise customers, this could open up liabilities.

Insurance and Risk Management

Increased corporate governance means more D&O exposures. Insurance can cover claims resulting from managerial decisions that have adverse consequences. Policies cover the personal liability of company directors but can also reimburse the insured company's costs. Common risk scenarios range from employment and HR issues, to misrepresentation, to failing to comply with laws. Coverage does not include fraudulent or criminal activity.

Limits of insurance coverage purchased can range from $1m for SME companies to $500m+ for global Fortune 100 giants.

In order to tackle the increase in management risk in future, executives need to develop a first-class risk management culture. Examples include instilling sophisticated cyber and IT risk management, keeping records of all information relevant to a managerial role and maintaining open communication with authorities, investors and employees.

Executives should ask tough questions about compliancerelated topics such as sanctions, embargoes, tax haven registrations, price-fixing and fraud and learn more about "classic" D&O exposures such as M&A, capital measures and IPOs. D&O coverage can be complex, so ensure key risks are covered. Conflicts of interest between the directors and the company must be avoided.

A company's internal risk management and compliance structure should have all these points on the radar, and procedures in place that adequately address or prevent them. This is probably the only defense left for directors and officers if they face a problem in one of these areas.

> Download the full report D&O Insurance Insights - Management liability today: What executives need to know

> Download the Executive Summary of the report

Related articles

photodune-3834701-laughing-girl-xs

Online insurance in Europe reached more than 100 billion EUR in 2016

Online and direct channels are the fastest growing business models in both life and non-life insurance industry in Europe. The market share of the online/direct channel business was, in 2015, 8.2% of the total business, while the total gross written premiums of this channel throughout all Europe reached 99.3 billion EUR.

2017-11-16
photodune-3834701-laughing-girl-xs

S&P Global: Polish motor insurers face a decade of uncertainty due to retrospective bereavement damages claims

Over 12 months, average prices for Poland's mandatory motor third-party liability (MTPL) insurance have shot up by about 47%. S&P Global Ratings attributes part of this spike in policy prices to the rising cost of bodily injury compensation claims in Poland over recent yearsPolish motor insurers have also seen fierce competition and inflation in spare parts claims, reads a study recently published by S&P Global. Courtesy to S&P's, XPRIMM readers are exclusively offered access to the study's findings.

2017-11-02
photodune-3834701-laughing-girl-xs

New insurance solutions to cover evolving exposures that businesses face

The global commercial insurance market was worth about USD 720 billion in premiums in 2016. The 10 largest markets mirror the world's biggest economies, and account for 73% of global commercial premiums. They include the leading industrialised countries of the G7 group, China, Australia and South Korea. The latest sigma study "Commercial insurance: innovation to expand the scope of insurability" is about the innovative risk transfer solutions available to cover the ever-evolving range of exposures that companies face.

2017-10-12
photodune-3834701-laughing-girl-xs

Bridging the protection gap in Eastern Europe

For some families living in the former industrial regions of Eastern European countries, the social welfare payments offered by the Government are the most expected moment, each and every month. They are most helpful as a survival tool but, at the same time, combined with insufficient or even sometimes inexistent state-driven programs for tackling these issues, are considered by experts as a factor against actual change in both mentalities and lives.

2017-09-21
photodune-3834701-laughing-girl-xs

What is happening with the Romanian private pensions' Second Pillar?

The future of the mandatory Second Pillar pensions is among the most disputed subjects, in the last period. After the rumors saying they'll be nationalized, the last discussions show that the participants' contribution will be reduced possibly to 1% from the current 5.1%, which will have a significant impact over the future pensions.

2017-08-31

ON THE MOVE

Swiss Re appoints new CFO and proposes new members to the BoD

Swiss Re announced that John DACEY, currently Group Chief Strategy Officer, is appointed Group Chief Financial Officer, effective 1 April 2018. He succeeds to David COLE, who will step down to pursue a non-executive career, while remaining a board member of several Swiss Re subsidiaries.

Piotr OZAREK is the PZU's first Ombudsman

Piotr OZAREK was appointed to perform the newly established function within PZU, as the first client's spokesperson of the insurer. His main task will be of helping in the most difficult and complicated cases in which PZU's clients are not satisfied with the solution.

Desmond BOHAN joins JLT Re as Senior Vice President

JLT Re, part of the global provider of reinsurance broking and consultancy, has appointed Desmond BOHAN as Senior Vice President in Stamford, Connecticut. He will focus on the continued expansion and development of JLT Re's Program practice in North America.

TOP EVENT

"Insurance and Pensions reloaded" - the 7th EIOPA Annual Conference

The 7th EIOPA Annual Conference takes place today in Frankfurt am Main, Germany. A review of the current supervisory covergence issues and of the prospects of the Pan European Personal Pension Product are on the event's agenda, together with analyzing the ways in which regulation may enable innovation.

22.11.2017

photodune-3834701-laughing-girl-xs

"IIF2017 - Insurance in the DIGITAL World" Conference took place in Vienna

"IIF2017 - Insurance in the DIGITAL World" conference brought together in Vienna well-known insurance professionals from all over the world who analyzed the latest digital trends in the industry, taking into account the fast digitalization of the financial services providers' world, in particular in the insurance field, which is creating both huge opportunities and strong challenges for the players.

14.11.2017

photodune-3834701-laughing-girl-xs

Croatian Insurance Days Live

On 9 November has started in Opatija, Croatia, the 2017 edition of the Croatian Insurance Days Conference, the traditional meeting of the Croatian insurance top professionals with their European peers. XPRIMM Publications are supporting the event as Media Partners.

09.11.2017

photodune-3834701-laughing-girl-xs

The 2017 Baden Baden Meeting: Short recap

The Baden-Baden meeting, one of the key events in the reinsurance calendar, has just set the final point of this year's edition. XPRIMM Publications have reported from the meeting's premises. Let's recap!

26.10.2017

Baden Baden Headlines 3: CEE insurance markets are attractive for reinsurers

Central and Eastern Europe insurance markets are an important source of business for Lloyds, total premium income from this region increasing by EUR 64 million since 2010, pointed out the Lloyd's representative in a seminar dedicated to CEE insurance markets: "We are seeing strong growth from Czech Rep, Poland, Slovakia and Ukraine. At the same time are some contractions from Russia, Bulgaria, Romania and Hungary due to challenging trading conditions as political implications and other sanctions".

25.10.2017

Baden Baden Headlines 2: cyber insurance market set to grow under regulatory presure; nat cat events more frequent, but losses per event are decreasing

Asian insurance market, especially the Indian market - are considered to be "the new El-Dorado" of the global re/insurance market, with rapidly expanding markets and an dynamic environment: "Indian P&C re/insurance markets are expected to grow at a pace of 15% per annum", according  to Victor PEIGNET, CEO, Global P&C, SCOR SE. The French -based reinsurer setted-up its Indian branch in 2016, after the authorisation from the local market authority - IRDAI. India's re/insurance market has become more attractive for global companies following the relaxation of regulatory requirements, and lately, "big names" in the industry entered the market by opening branches: GEN Re, SCOR, Lloyd's of London, MUNICH Re, SWISS Re, Reinsurance Group of America (RGA), HANNOVER Re, XL Catlin and others.

24.10.2017

See all