Many executives have required the companies to take out D&O insurance as a safety measure to assume strategic positions
The Brazilian insurance market presented a growth of 6.4% in January this year, according to data from the National Insurance Confederation, CNSeg. The highlight goes to the segment of damage and liability, which exceeded by 20.2% the mark of the same period in 2021. The boom in the sector followed the pandemic, as the health and economic crisis affected, respectively, human life and business. In a scenario of risks, it has become essential to take precautions.
For companies, any risk, however small, is taken into account. For this reason, the increase in demand for civil liability insurance, or D&O insurance, the acronym for Directors and Officers, is not accidental. This type of insurance aims to protect the personal assets of executives with high decision-making power within companies and who may eventually suffer civil or criminal investigations or liability for damages caused to third parties or the environment.
This is a way to financially support the executives, in their individual capacity, if they are held accountable for mismanagement or omission that leads to strategic management errors, such as stock drops, tax and judicial processes, and even the bankruptcy of the company. These complaints can come from consumers, employees, shareholders and regulatory agencies, such as the Central Bank (BC), CVM (Securities Commission) and Susep (Superintendence of Private Insurance).
Many executives have required the companies to take out D&O insurance as a safety measure to assume strategic positions. The insurance covers statutory directors, administrators, businessmen with management power, directors, lawyers and internal accountants. Liberal professionals, such as architects, engineers, dentists or veterinarians, for example, can also take out this type of insurance.
Among the main coverages of the policies are: coverage with judicial costs; online attachment and deprivation of liberty; coverage for tax fines from regulatory agencies; fiscal responsibility; coverage for defense costs for investigations or assessments; personal image protection; coverage against unfounded and defamatory actions; coverage for settlements; defense of environmental damages; among others.
It is important to seek the advice of specialized professionals, because some terms may open breaches to the nullity of the contracted coverage. Likewise, it is important to find partners who understand the business and its needs. The contracts need to be aligned to the company’s reality, with clear and well-specified clauses, in addition to defining the maximum limit of indemnity.
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