A 2012 PriceWaterhouseCoopers whitepaper on risk practices talks about the increasing frequency of black swan events, those catastrophic events that catch us by surprise. “By their nature, black swan events should only occur at unprecedented intervals. Yet recent experiences suggest that events that fit the definition of black swans are happening more and more frequently. So, are black swans actually turning grey?” Is the unthinkable now not only thinkable, but part of the landscape? It is these types of events for which Directors and Officers (D&O) insurance is designed. Will they happen? Hopefully not. But luckily, D&O insurance covers more than hope does.
What You May Not Be Getting with Your Current Policy
For the past five or six years, we’ve been in a soft market. Usually, these ebb and flow, but we’re still in the thick of it. What this means for policy purchasers, though, is that prices are very low. How could this be anything but good? The issue is that the policies tend to be very broad. Coverage has expanded so much that you cover a number of interests under one policy. For instance, you’ll have directors, officers, independent directors, internal management, and the company at-large all sharing one limit.