Regulatory investigation cover
An extension of a directors' or financial lines policy that funds the advisory costs incurred to respond to an authority's investigation, even before any wrongdoing is alleged.
An investigation by a markets, competition, data protection or financial supervisory authority rarely begins with an accusation. It takes the form of document requests, summonses to interviews, dawn raids, and can last years before sanction proceedings are opened, or never are. During that phase, directors and the company incur considerable legal and advisory costs, although no claim in the policy's classic sense yet exists. Regulatory investigation cover pays these costs from the first formal request, or even, in the broadest wordings, for an internal investigation conducted in response to an authority's inquiry. It covers representation costs for individuals and, depending on the policy, for the company. It does not cover fines, whose insurability is limited by public policy, or compliance costs. For the underwriter, it is a fast-growing item, driven by the multiplication of competent authorities, in personal data, cybersecurity, sanctions and sustainability, and by their international cooperation.
Textbook case: after a cyberattack, the data protection authority opens an investigation into a company and summons its chief information officer and data protection officer. The 400,000 euros of legal fees incurred during the eighteen months of inquiry are paid by the investigation cover; the fine ultimately imposed is not.
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