Directors' and officers' liability insurance (D&O)

Directors' and officers' liability insurance, universally known by its English acronym D&O, covers the financial consequences of claims brought against individuals who exercise management or administrative functions in a company. Such claims may be brought by shareholders, creditors, employees, regulators or third parties, and typically allege management failure, misleading financial disclosure, a breach of fiduciary duty or a violation of a law or regulation. The D&O policy classically comprises three parts: Side A, which indemnifies the director directly when the company cannot or will not cover them; Side B, which reimburses the company when it has indemnified a director; and Side C, known as entity coverage, which extends protection to the legal entity itself for certain types of claim. The D&O market is intrinsically cyclical, with loss experience driven by the litigation climate, notably securities class actions in the United States, social inflation and nuclear verdicts, as well as by inflows or withdrawals of reinsurance capacity. The NIS2 Directive has extended D&O exposure by making directors personally liable for breaches of the cybersecurity obligations of Article 20, creating a new convergence with cyber policies.

In the second quarter of 2025, D&O rates for listed US companies show their sixth consecutive decline, at around minus 9.5 per cent according to Lockton. A large US industrial group takes advantage of this soft market to extend its D&O cover to defense costs linked to cybersecurity investigations and NIS2 proceedings in Europe, at a marginal additional premium. Its D&O insurer simultaneously negotiates with the group's cyber insurer a coordination endorsement to prevent any double indemnification in the event of a loss linked to a cyber incident that engaged the personal liability of executives.

D&O, assurance dirigeants, directors and officers, responsabilité mandataires sociaux, management liability