Malayan introduces D&O liability

MANILA, Philippines - An increasing number of top level executives in companies belonging to both the public and private spheres are expressing greater interest about a certain type of coverage dubbed as directors and officers (D&O) liability insurance.

In a 2012 survey conducted by Towers Watson, a leading global professional services company, 70 percent of 325 participants, which are from private and public companies and non-profit organizations representing industry sectors like manufacturing, insurance and energy and utilities, raised the issue on coverage and scope of D&O insurance policy. The poll result reflects a 12-point increase from last year’s 58 percent.

According to the report, this increase is indicative of the sensitive nature of the coverage, and the directors and officers concern towards the litigious environment in which they function.

Because there is little that they can do to minimize the effects of litigation and to reduce the complexity of the legal and regulatory aspects of a business, they have recognized that D&O liability insurance policy can be an effective means to at least mitigate legal actions.

Misstatements issued to customers, contractual disputes, neglect and breach of duties are just some of the grounds for legal action that can take a toll on directors’ and officers’ personal finances and on the reputation of their organizations.

With a comprehensive D&O insurance policy, company executives can take certain management risks inherent in their duties without fear of incurring personal financial losses in case a lawsuit is filed against them.

Under a D&O policy, directors and officers are protected against claims occurring from wrongful acts they committed while performing their duties, and it allows the company to reimburse the payments made to indemnify its executives against the claims filed against them.

In the Philippines, there is a notable increase in interest in D&O during the last two years, as company executives and shareholders become more mindful of potential liabilities they might face.

Local D&O cover is usually tailored fit to the industry one company is into, and the coverage is benchmarked with the global trends.

Malayan Insurance Co. Inc. (Malayan Insurance) offers D&O liability insurance called Foresight.