D&O insurance protects directors, officers and other senior employees against costs arising from claims made against them in relation to acts they are alleged to have committed while acting in their official capacities - typically resulting from an error, omission, or breach of duty.

The cover provided by a D&O policy can be broken down into three sides:

• Side A covers losses sustained by Insured Persons where they have not been indemnified by the company. Typically, no retention applies to these claims

• Side B covers the company where it has indemnified an Insured Person. This is a balance sheet loss, so a policy retention will apply

• Side C covers the company itself where claims are brought against it, but only for securities claims.

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Run-off is an extension to a D&O liability policy. It provides the board with dedicated limits of liability for future claims arising from wrongful acts that occur prior to the effective date of, for example, a change of control. Terms are generally provided for a three-to-six-year period beyond the change in control, and are finalised to match the statute-of-limitation period during which claims can be brought.

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Commercial Crime policies cover a policyholder’s direct financial loss as a result of the theft of money, property, or securities that belong to the company or are in the company’s custody or control. They cover both internal and external threats, including impersonation fraud, social engineering, and embezzlement. They can also cover expenses related to proving a crime loss.

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Employment Practices Liability insurance protects a company, its managers, and its employees against the financial risk that results from employment-related claims. EPL insurance can respond to allegations of, for example, harassment or sexual harassment, emotional distress, discrimination, negligence, refusal of promotion, or unfair dismissal. Along with defence costs, an EPL policy can also cover fees, expenses, and compensation awards, including punitive damages (where insurable by law) that arise from alleged or actual wrongful employment acts.

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Pension Trustee Liability insurance covers losses arising from claims alleging a breach of trust, duty, or statutory provision, along with negligence, administration errors, wrongful omissions, misstatements, and misleading statements. A PTL policy will pay defence costs, judgements, costs of legal representation in fact-finding investigations, settlements, awards, and damages.

At wind-up following a buy-in and buy-out of a pension scheme, Pensions Discontinuance/Run-off is regularly considered. This protects trustees, corporate trustees, and employees of the sponsoring employer acting on behalf of the pension scheme against future liabilities arising from a claim made against them during the policy period that relates to actions they took on behalf of the scheme. Given that there is unlikely to be an indemnity available from the sponsoring employer company in the future, this type of cover is vitally important. These policies can also cover overlooked beneficiary costs, typically on a sub-limited basis.

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Management Liability insurance policies are available to privately owned companies with assets/revenues below specific thresholds. They go beyond the core cover provided by a typical D&O insurance policy by including Corporate Legal Liability, Employment Practices Liability, Pension Trustee Liability, and Crime modules.

Public Offering of Securities Insurance covers liabilities arising from the prospectus and the offering itself, including the roadshow. Unlike a D&O policy, a POSI policy is a single-purchase product that lasts for the duration of the liability period - usually determined by the statute of limitations in the applicable jurisdiction. Cover can be provided for the following exposures:

• Civil and criminal liabilities arising from negotiations or decisions made in connection with the offering, including the road show

• Advancement of defence costs

• Pre-wrongful-act full-limit coverage for investigations

• Cover for preliminary prospectuses, including pathfinder documents

• Cover for any liability arising from warranties owned by the company or its directors made in the underwriting agreement

• Cover can be extended to include selling and/or controlling shareholders’ liabilities

• Claims for misrepresentation in the lead-up to the offering (i.e. negotiations, decisions, discussions and presentations (e.g. the road show)