Background. In Canada, shareholder class actions are at an all-time high, thanks in part to the complexity of the world we do business in (think cyber risks, climate change, diversity and, of course, COVID-19) and a downturn in the Canadian economy. At the same time, pressure to perform is making some underwriters more risk averse than in the past.
Impact. There are fewer insurers willing to underwrite D&O insurance. Those that continue to write this business are being more selective in the companies they will write policies for and charging much higher premiums for the privilege. D&O insurance is essential to running a business safely. To get it, we predict that businesses will have to convince insurers that they are a good risk.
Top tip. If they want D&O insurance at reasonable premiums, corporate execs and board members will have to take the ESG and risk management aspects of their business well beyond corporate social responsibility reports and ad campaigns. Corporate and commercial legal experts who understand what insurers are looking for, and the best ways to achieve their corporate responsibility requirements, will be key to achieving this.
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