Willis Warns: Check D&O Policy Coverage Abroad
NU Online News Service, April 5, 3:16 p.m. EST?Insurance broker Willis Group Holdings is warning multinational companies that their directors and officers policies may not provide coverage for unique exposures that management of overseas subsidiaries face.[@@]
The New York-based brokerage firm said that in light of recent developments abroad, such as the demise of Italian dairy-product giant Parmalat, "an important recent lesson learned is that D&O claims are not the exclusive province of the United States."
While most D&O policies are generally designed to provide worldwide coverage, it may not be enough for multinational companies, the broker said. Willis commented that the global wording of many D&O policies usually doesn't specifically take into account many exposures of directors and officers in foreign jurisdictions.
Executives abroad, the brokerage firm noted, may face additional personal liability in overseas locales, and their D&O policies may need specific tailoring to meet these exposures.
"Multinationals should closely examine their D&O policies to ensure that their foreign exposures are properly addressed and, most importantly, that their directors and officers are properly protected," Willis stated.
Willis said some country-specific modifications may need to revise several policy sections. Here are some examples illustrated by the brokerage firm:
? U.K. companies may seek coverage for employees serving as shadow directors.
? Australian companies may want additional amendments including modifications to the subsidiary definition and the "Insured versus Insured" exclusion.
? In the Netherlands, public-company D&O policies may need to be revised to include any duly elected or appointed member of the management, and employment-practices extensions may be included, along with punitive damage coverage.
? German subsidiaries may require a special provision addressing their unique supervisory boards and management committees.
? Italian directors and officers may inquire whether they have an endorsement that meets their unique tax liabilities.
? Canadian directors facing personal tax and benefit liabilities may inquire about whether their D&O policy has the required specific extensions.
Willis also said that in addition to such foreign-jurisdiction endorsements, a locally issued D&O policy may be needed as well in countries like Spain, Brazil and Hungary. In many cases, these policies reflect small limits that serve as "filler" for broader, global D&O programs.
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