The US market for directors and officers (D&O) insurance grew to $ 8.81 billion in 2020.
The US D&O liability insurance covers the personal liabilities of directors, officers and their spouses if they are charged with culpable acts while working for an organization. Charges can be for various reasons such as misuse of company funds, fraud, etc. This insurance covers legal fees, defense costs, settlements and other costs to keep companies financially secure so that companies do not suffer losses that can be caused by misconduct, mistakes etc. This type of insurance protects the organization from financial uncertainty and provides protection for the liability of directors and officers in the event that they are sued by employees, competitors, etc.
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Top Companies: American International Group Inc., The Traveler Companies, Great American Insurance Group, CNA Financial Corp., HCC Insurance Holdings, Allianz Global Corporate and Specialty SE, General Re, Nationwide Mutual Insurance Company, Marsh LNC, and Chubb Limited. and other.
Market dynamics and trends
In the United States, the D&O insurance market has become significant due to excessive losses due to major corporate events and allegations such as accounting misconduct, bankruptcy compensation, reorganization, mergers and acquisitions, or management embezzlement. The US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) have also renewed their efforts to hold individual directors and executives accountable for alleged corporate misconduct. The Yates Memorandum is one such example of this reinforcement. According to this memorandum, the company must identify all individuals suspected of misconduct in any way, regardless of their status or seniority, in order to earn an honor for working with the government (also known as a cooperative loan). In addition, the #MeToo campaign launched in late 2017 to raise awareness of the prevalence of sexual harassment in the U.S. workplace has increased the number of employee liability insurance claims. In the past, D&O and EPL insurance were offered as part of a single policy with combination limits or some restrictions. This approach to D&O coverage enabled aggressive discounts, with most of the premium allocated to EPL engagements.
However, D&O does not assume any costs that arise from criminal activities, punitive damages and willful misconduct, which inhibits the growth of the D&O insurance market to a certain extent. On the other hand, risk experts optimize their current insurance plans to use capital more efficiently. By working with the right broker, private company risk professionals like their publicly traded counterparts can gain predictive modeling capabilities. In their analysis, these consultants can use company-specific indicators to assess the potential and severity of D&O legal disputes within five years. Such predictions can help make important decisions about the design of an insurance plan in the years to come.
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Market segmentations and scope of the study:
US Directors and Officers (D&O) Insurance market share was analyzed by coverage, end-user, and region. Based on coverage, the market is divided into labor litigation, regulatory investigations, customer lawsuits, accounting irregularities, and other stakeholder claims. Based on the end user, the market is divided into public organizations, private organizations, and non-profit organizations.
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