Directors & Officers
Directors & Officers (D&O) insurance protects the personal assets of directors and senior managers when they're sued for decisions they made in their role. Regulatory action, shareholder claims, employee suits, and creditor claims can all reach personal wealth, and D&O is what stops them.
We place D&O for listed companies, private firms, startups, and NGOs, sized to the real exposure of the board rather than a generic limit.
Cover
What this typically covers
Side A (individual cover)
The director's own money, for when the company cannot pay to protect them. It is the limb that matters in an insolvency, because that is when a company stops indemnifying anybody.
Direct protection for directors and officers when the company cannot or will not indemnify them.
Side B (company reimbursement)
The company has already paid the director's costs and this pays the company back. Most claims run through here, which is why it looks like the company's policy right up until the day it is not.
Reimburses the company when it indemnifies directors and officers.
Side C (entity cover)
The company itself as defendant in a securities claim. Mainly a listed-company exposure, and the reason the limit can be shared in ways worth understanding in advance.
Cover for the company itself in securities claims (mainly for listed entities).
Regulatory defence
Answering a regulator. An investigation is not a lawsuit, and it can still take a year of your life and a great deal of money before anyone decides whether there is a case at all.
Legal costs of responding to investigations by regulators: JSE, FSCA, Competition Commission, SARS.
Employment practices
An employee sues over how they were treated or dismissed. It is bundled in here often enough that people assume it is included, and left out often enough to be worth checking.
Claims from employees for wrongful dismissal, discrimination, or harassment, often bundled within D&O.
Run-off cover
You left the board and the claims did not. Liability follows the decisions you made while you were there, so the cover has to keep running after you stop.
Continued protection for past directors after they leave the board or the company is wound up.
Limits
What this will not cover
Money that ended up in your pocket
Personal profit, remuneration you were not entitled to, and gains you have to give back. Insurers pay for mistakes, not for benefits obtained improperly.
Deliberate dishonesty, once established
Fraud is not insurable. Defence costs are usually advanced while the allegation is unproven, and become repayable once a court finds against you.
Claims already on the table
Anything pending or already known when the policy started, and anything arising out of the same facts. It is why circumstances are notified early: the notification is what captures the year.
One insured suing another
Disputes between directors, or the company suing its own board, are excluded in most wordings, with carve-backs that vary considerably. If a boardroom is heading that way, read the exclusion first.
Claim
When you claim
A circumstance is enough to notify
This is claims-made cover. A regulator's letter, a shareholder demand under section 165, an aggrieved executive's attorney: all of it is notifiable before it becomes a claim, and notifying is what keeps it inside the policy year it arose in.
Which limb responds decides who is protected
Side A protects the individual where the company cannot indemnify them, which is the situation in a business failure. Side B reimburses the company for indemnifying them, and Side C covers the entity itself. Establish early which one you are claiming under.
Get consent before appointing counsel
Defence costs start immediately and are usually the largest part of a D&O claim, but appointing your own attorney without the insurer's consent can put those costs outside the policy. Admitting liability does the same.
Questions
Frequently asked questions
Most D&O claims in South Africa are not shareholder actions against listed boards. They come from employees, creditors, business rescue practitioners and regulators, and the directors of a private company are personally exposed to all four.
Until it cannot. An indemnity is worth exactly what the company's balance sheet is worth, and the moment you most need it, insolvency or a dispute with your own board, is the moment it stops. That is what Side A exists for.
Continued cover for decisions you made while in office, after you leave or the company is wound up. Claims-made policies respond to the claim rather than the decision, so without run-off the exposure outlives the cover.
It covers the cost of responding to and defending the investigation, which is usually the larger number by some distance. Whether a penalty itself can be insured is narrow, and it depends on the law that created it.