Organization board members assume a level of responsibility when making tough, complex decisions that impact the company they represent. Held legally and financially responsible for the conduct of the institution, directors and officers do not always recognize the potentially devastating liability exposure that can place personal and institutional assets in jeopardy. Any organization, whether publicly traded, private or non-profit, has potential D&O exposure. The cost of legal defense when a director or officer faces a claim can be significant.
To make decisions without the threat of personal liability hanging over them Directors and Officers need to have D&O insurance in place to help protect them against significant defense and settlement costs. This coverage can be a Stand Alone policy or part of a packaged Business Insurance policy.
Private companies purchase an average of $50.7 Million in D&O Limits
The average settlement value of derivative shareholder action is $7.2 Million
18% of private companies have recently increased their D&O limits
Non Profits report the highest proportion of claims -61%
More than 1.5 Million non-profit organizations are registered in the US.
According to D&O Liability survey, 30% of respondents reported having a claim in the past 10 years
Lawsuits filed in 2013 by the FDIC claim $1.2 Billion in damages for the actions of directors and officers
In 2013, mergers and acquisitions (M&A) deals attracted an average of more than 5 lawsuits
In recent years, shareholders filed suit in more than 90% of M&A deals valued over $100 Million
94% of Merger & Acquisition deals were challenged by shareholders in 2013
From 2004-2013 derivative lawsuits made up 39% of all directors and officers liability claims
In recent years , shareholder derivative actions represent 17% of all securities litigation
According to the Bureau of Labor Statistics there are 2,303,200 top executives in the US and 261,500 top executives expected to enter the workforce by 2022
This is reprinted from InsuranceMarketing.com/Spring/Summer 2016 issue, For more information; contact Corrin Trowbridge 650-876-9600, ctrowbridge@farmersagent.com
