SMEs are buying up directors' and officers' cover in their droves.
Small-to-medium enterprises (SMEs) are purchasing directors' and officers' (D&O) cover in greater numbers, according to an AIG Europe (UK) report.
The proportion of SMEs buying D&O policies has almost tripled in the past five years, from 19.8% to 58%.
David Woolard, UK corporate account manager, financial lines at AIG, said: “These statistics underline what we are hearing from our insureds. While there has been a great deal of attention paid to the risks facing quoted companies in terms of shareholder actions, the directors and management of SMEs face a range of issues for which they need comprehensive and robust coverage — coverage that is broad enough to encompass the existing and emerging risks that they face and that has both the financial security and expert support that they need if action is taken against them.”
Issues faced by SMEs include:
• Actions leading to disqualification
• Losses out of actions against companies
• Actions against an estate or a retired director
Woolard added: “The possibilities for actions are wide and varied, like business life itself and directors' duties are onerous. Although these statistics show that more and more directors are realising their potential exposures and taking action, it's important to look at the quality of cover bought. There is plenty of cheap D&O cover out there which may not cover wide enough areas, such as entity cover, but often directors don't realise these aren't included.”
