Zurich North America launches multinational Side A D&O cover

A new standalone Side A D&O insurance coverage option for US-based multinational companies with non-US board members and officers has been launched by Zurich American Insurance Company. The new Side A-only D&O policy, International Towers by Zurich Executive Universal Select, addresses a “critical need” for non-US directors and officers. “It helps protect their personal financial assets if they are faced with a management liability lawsuit and their company cannot cover their legal costs due to local laws, court orders or other reasons, known as non-indemnifiable losses,” said Zurich. The insurer added that the new policy goes beyond fulfilling this essential need, “helping address a worrisome litigation trend impacting multinational companies and their leaders: the increasing severity of D&O lawsuits and losses in the US, part of the phenomenon often called ‘social inflation’”. Zurich explained that with a traditional international D&O programme, where local policies in other countries have their coverage limits tied to the US policy, a single case in the US could deplete a company’s entire international programme limit, leaving their non-US D&Os without any coverage if they are named in a legal action. The new Side A offering guards against the unwelcome prospect of their personal assets being put at risk, said Zurich. “With the increasing severity of securities class action claims in the US, primary D&O limits are more susceptible to being fully eroded,” said Brian Zink, head of financial lines for US national accounts at Zurich North America. “Having a dedicated non-US D&O limit is gaining importance among our customers for this reason. Individual directors and officers are most concerned about non-indemnifiable loss, as their personal assets are on the line in these situations, so we designed a solution to meet this growing need. Bringing this product to them addresses an exposure that can keep them up at night.” The new policy includes a master policy issued to the US parent that covers Side A D&O risk for non-US directors and officers only. By covering only non-US directors and officers, the limits are insulated from US losses, which are more frequent and severe, said the insurer. It also includes locally admitted Side A policies, issued by locally licensed insurers in other countries, to ensure those non-US D&Os are covered with policies that comply with local regulations. “These locally admitted policies are significant because each country has its own insurance regulations, and some require the insurer to be locally licensed for coverage to be permissible. If a US policy is not recognised in a given country, a coverage gap can result. This is particularly dangerous with Side A D&O claims where the D&O cannot have their legal expenses covered by their company. Without locally admitted Side A coverage, D&Os personal savings, houses, vehicles and other assets can be at risk if they face a lawsuit in connection with their role,” said Zurich. It went on: “To remedy this problem, many insurers have included locally admitted policies as part of their primary D&O offering, but the local policies typically have their limits tied to the US primary D&O policy. The International Towers by Zurich Executive Universal Select policy provides a separate limit for losses outside the US.” The insurer also noted that International Towers by Zurich policies can be purchased from Zurich without Zurich being the primary or lead Side A carrier on the customer’s US D&O tower. “Zurich has provided international solutions for almost 50 years in the US, and this new Side A-only offering, in addition to our full coverage D&O from International Towers by Zurich, is the latest example of how we listen to our customers and solve for their evolving needs,” said Andy Zoller, head of international programmes at Zurich North America. “Providing it to their overseas directors and officers can help these businesses attract and retain top talent. It helps assure their non-US directors and officers that they’ll have the management liability coverage they need, if or when they need it.”

Zurich North America launches multinational Side A D&O cover

New policy aimed at US-based multinational companies with non-US board members and officers

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