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​D&O Insurance and Indemnification

2018.July  Willis Towers Watson 2018 Management Liability (Directors and Officers) U.S. Survey. This survey provides comprehensive insights into board practices, concerns, types of coverance, and cost - among other useful statistical points. 


2015.Jun.02  Sample Indemnification Agreements.  Here are a few links to sample indemnification agreements. They come from SEC Form 8-K disclosures by U.S. public companies that recently announced their approval of such agreements:


2015.May  D&O Coverage Amounts - Survey Data. Below are two links that provide useful information.  The text quoted below from a 2012 Business Insurance article indicates a 4-to-1 ratio of coverage between public and private companies. That spread has widened in recent years due to escalating public company risks. For making comparisons, the Advisen report provides private company data, broken down by industry and company revenues (see page 10 of the Advisen survey).  

  • From Business Insurance article 3/11/2012:
    • The average policy limits for all survey participants was $86.9 million in 2011, up from $80.4 million in 2010. 
    • Public and private companies reported average limits of $126.8 million and $36.3 million, respectively. 
    • That compares with $118.3 million for public companies and $34 million for private companies in 2010.
  • From Advisen’s 8/2013 Survey re Private Company Coverage Levels: 
    • The average premium paid by private companies with annual revenue up to $50 million is $15,851 for an average policy limit of $2.6 million.
    • Accounts with $50 - $100 million of revenue pay on average $50,000 for their program, buying average limits of around $5 million. Premium and limit averages continue to diverge by industry sector as the revenue size of the company increases.


2013.Aug  U.S. Private Company and Not-for-Profit Survey. A wealth of information, including excellent charts, is available in this 37-page Advisen/AIG survey.2013.July.15  D&O Insurance and Indemnification Memo for Public Companies. This Gibson Dunn memo identifies 11 points to consider. 

2013  D&O Insurance Survey - Towers Watson.  See this 2012 survey for findings (quoted here from TW's release) such as --

  • 25% of public companies surveyed and 14% of private and nonprofit companies said they had increased their D&O limits at renewal.
  • Despite increased interest from their directors and officers, less than half (47%) of the respondents conducted an independent review of their D&O policies in the past two years. Among those that conducted a review, 45% used a law firm, while 36% completed the process through a broker.


2012.Dec.31  Advancement of Legal Fees Denied - Delaware Decision Provides Healthy Reminder. In Miller v Palladium Industries, the DE Chancery Court decision begins by recognizing that Delaware law both authorizes the mandatory advancement of defense costs, and favors indemnification and advancement in order to attract qualified directors. Unfortunately for the director seeking an advancement from Palladium Industries, its Bylaws did not provide him with an unconditional right to the advancement, but instead reserved power to the board of directors to deny that in a specific case. While that corporate discretion is often sensible, the litigation should remind corporate boards to assure that their indemnification rights, as well as D&O liability insurance, do not carry unexpected carve-outs or surprises. For a checklist of items to consider, just email Mark.

2012.Mar.11  D&O Survey - Coverage Trends.  The Business Insurance article titled "Directors and Officers Buyers Increase Coverage Limits" reports public vs. private company data on relative D&O insurance coverage (with results drawn from the Towers Watson survey noted below). The article states, for example -- 

  • The average policy limits for all survey participants was $86.9 million in 2011, up from $80.4 million in 2010. Public and private companies reported average limits of $126.8 million and $36.3 million, respectively. That compares with $118.3 million for public companies and $34 million for private companies in 2010.


2012.Jan  D&O Survey - Global Trends.  This 13-page survey focused on UK public companies provides helpful though general information and survey data, such as -- "67% worry whether their D&O policy will be able to respond in all jurisdictions."

2011.Dec  D&O Insurance After Dodd-Frank.  This article provides detailed information about policy terms (other than coverage levels) to review concerning the adequacy of D&O coverage for financial institutions and other companies.