“This means paying attention not just to directors but also to officers in D&O policies and indemnities,” says Barton, “it is often clear which statutory directors benefit from cover, but the term ‘officers’ can be applied and interpreted much more broadly.”
Companies should therefore have a process of recording changes in directorships, job titles and roles, and to ensure individuals are given full information on their cover when they assume new positions or move through the organisation.
Individual directors and officers and their employers should place great value on getting D&O policies and indemnifications correct at the outset, and keeping them up to date through the course of an individual’s career.
“Things that are overlooked in the good times can cause big problems should problems arise, not only for the individual left exposed, but also for the company,” says Barton, “which will never benefit from a messy situation with its own employees during regulatory investigation or litigation.”
This article first appeared in Willis’s Resilience Magazine, winter 2015.