Directors and officers liability insurance is essential for most companies, and all firms need to weigh the ramifications of not having this important coverage. For multinational companies, the need for directors and officers (D&O) coverage should be even more clear. While this can be a complex subject, an insurance expert's experience and knowledge can make a huge difference for firms operating globally. For starters, having a local D&O policy is legally required in most countries, with Australia, Brazil, Canada, China, Italy, France, Mexico and the United Kingdom among the jurisdictions where a firm needs a policy bound within that country. If a company lacks the right multinational D&O coverage, the firm’s directors and officers can face criminal and/or personal liability overseas.
Local D&O policies allow multinational companies to remain compliant if a claim occurs in the foreign location where a local policy is needed. Chubb, Travelers and Zurich are among the carriers offering expertise in multinational policies.
Also, for U. S. companies operating overseas, it’s important to link multinational directors and officers coverage with their domestic D&O coverage. Here’s why: in the event the foreign D&O policy has been completely eroded, then specific language should be placed on the U.S. D&O policy to continue the appropriate form of payment to that specific country. (As a general rule, foreign D&O policies have lower limits.) That’s why the tie-in of domestic and foreign policies when erosion of foreign policy limit has taken place is essential.
Ultimately, firms seeking to grow their multinational presence need an insurance broker experienced in international risk management to help guide them through these tricky waters. From securing local policies to ensuring American policies have the proper endorsements to ensuring the proper payment of premium taxes, a broker’s eye for detail can be the difference between coverage and no coverage.
For more information on understanding the complexities of directors and officers insurance for multinational companies, don’t hesitate to contact a Plexus property and casualty executive at 847-307-6100. Let’s have a conversation about this important subject. We’ll walk you through the necessary steps to ensure your firm is taking the proper approach to coverage. We’re here to help.