D&O 1st Party

Director and officer reputation insurance for first party loss is a strategic component of a comprehensive defense against litigation. Steel City Re’s parametric coverage, which is triggered by a failed enterprise level business process and impairment of an insured’s Reputation Value Metric, can be used to offset expenses incurred by the board or the enterprise as a whole – that are beyond the coverage of their D&O liability policies.

Marchand v Barnhill and In re Signet heralded reputation risk’s breach of boardroom doors. D&O liability coverage is insufficient to protect Directors and Officers against personal reputational damage caused in the court of public opinion.

“Stakeholder Expectations: Investors, regulators, and legislators keep raising the bar for boards on the oversight of everything…”

Adaptive Governance: Board Oversight of Disruptive Risk, National Association of Corporate Directors

Director and Officer Culpability: ESG Insurance

Reputation risk, you may be surprised to learn, is actually a class of perils. For boards, the most relevant class members include derivative litigation, social inflation (shocking verdicts), and humiliation in the court of public opinion.

If a board’s oversight of a company comes under attack forcing a director to resign, personal losses may be an annual compensation of about $275,000 a year for each corporate board they serve on, and with most serving on multiple boards, this is only the beginning of the stramash to come.

Steel City Re’s ESG Insurance is specifically designed for Directors & Officers. Underwriting of the insurance policies is led by the Lloyd’s syndicate, Tokio Marine Kiln.

“Corporate names are resilient: when their images get damaged, a change of management or strategy will often revive their fortunes. But personal reputations are fragile: mess with them and it can be fatal.”

John Gapper

Reputational Damage Can Turn a Director into a Professional Pariah.

An adverse event can implicate a director. If he or she becomes less desirable to the other corporate boards, that usually means millions of dollars in losses over the course of a career.

Steel City Re offers products that are a supplement to traditional D&O coverage and that protect individual corporate leadership against these types of career-altering events.

Specifically, with corporate ESG activities drawing heightened scrutiny and posing both legal and reputational risks when they fail to meet expectations, Steel City Re launched in September 2021 ESG Insurance. Director and officer reputation insurance pays for extraordinary “strategic managerial and governance actions signaling corporate values” that may arise in the context of an ESG crisis.

An ESG Insurance Fact Sheet can be downloaded from a link above under the heading of ESG Insurance Fact Sheet.

What’s your strategy?

Reputational risk is a concern for every company, organization or individual in corporate leadership. Let us help develop your strategy for reputational resilience.

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