IUA publishes D&O liability insurance guide for multinationals
The International Underwriting Association (IUA) has published a D&O liability insurance guide addressing the complex compliance, tax and coverage issues surrounding the purchase of D&O liability cover by multinational companies.
The guide focuses on the increasing number of businesses that are considering utilising subsidiaries as the main policyholder on a non-admitted basis when seeking D&O liability cover. The IUA said that in such cases there are a number of important legal and compliance considerations to be examined.
“Rules determining whether an insurer can underwrite D&O cover in a country where it is not licenced vary from jurisdiction to jurisdiction, and in some cases it is strictly prohibited. Financial interest clauses are sometimes employed as a solution, but their use can be limited, particularly in the D&O context,” said the association.
Chris Jones, director of legal, underwriting and claims at the IUA, said: “Our guide is designed to highlight questions that firms should ask to ensure that they receive the D&O coverage they require and expect. There are many countries, for example, where insurers would face challenges in seeking to pay D&O claims if they are not licensed or admitted locally.”
The guide lists a number of possible coverage limitations. The IUA explained: “Since, for example, cover for the directors and officers of subsidiaries under a D&O policy is typically linked on the listing of the parent company as the policyholder, the naming of a subsidiary of a parent company as a policyholder could result in there being no cover for the directors and officers of the parent company and/or some or all of a parent company’s subsidiaries.”
Tax issues highlighted in the guide include the potential liability for premium taxes to be paid in each country where there is a covered subsidiary for multinational policies.
