Directors & officers liability insurance (D&O) is a promising area of the company economic security strengthening.

The article is devoted to the D&Oas an institute of civil liability insurance, its history, legal nature and type of affiliation, the object of insurance, insurance risks and restrictions of insurance, conditions of implementation.

The specific affiliation of D&O insurance to liability insurance and the ratio of D&O insurance to third party liability insurance, liability for non-performance or improper performance of contractual obligations and professional liability are determined.

The authors identified the preconditions and changes to the legislation and trends in case law, which update the prospects for the D&O insurance development: the introduction of the doctrine of “piercing the corporation veil”, the institution of derivative lawsuits, personal liability of officials in case of insolvency of the debtor.

D&O insurance is a complex type of insurance that combines insurance of contractual and tort directors liability, company tort liability, and financial risks (protection costs).

 D&O insurance policy can include three programs: a) covers the liability of directors; b) reimbursement of the company for expenses paid as a result of the actions of its directors; c) losses of the company on lawsuits related to the issue of securities.

Analysis of the legal nature of damage (loss) to the company and third parties in the process of performing fiduciary duties by officials, led to the conclusion that the responsibility of directors for non-performance or improper performance of fiduciary duties to the company is corporate, and liability to third parties – tort. The classic D&O insurance policy covers liability to third parties (by tort).

The doctrine of a corporation (the actions of directors are seen as the actions of a legal entity) often contradicts the concept of liability for tort. Cases of fiduciary liability are usually not covered by the D&O policy. Insurers in this case can only reimburse the cost of protection. The interests of creditors become paramount, displacing the interests of shareholders, when the company becomes insolvent.

The study of D&O allowed the authors to identify a number of scientific and practical conclusions and proposals for legislation.

Bibliography

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3. Kroeger et al, Directors and Officers Liability: Prevention, Insurance and Indemnification (Law Journal Press 2003) (in English).

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 Edited books

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12. Denison J, ‘Anticipated Coverage Issues Arising from Securities Actions Seeking Return of Ill-Gotten Gains’ (2005) 33 Securities Regulation Law Journal 162 (in English).

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Conference papers

19. Turbina I, ‘Strahovanie otvetstvennosti ispolnitel’nyh organov hozjajstvennogo obshhestva kak jeffektivnyj mehanizm ih zashhity’ v Aktual’nye problemy prava: materialy III Mezhdunar. nauch. konf. (Buki-Vedi 2014) 74–6 (in Russian).

Theses

20. Timofeev V, ‘Problemy ispolnenija objazatel’stv po strahovaniju’ (avtoref dis kand jurid nauk, 1997) (in Russian).

Websites

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23. Tarasenko E, ‘Sovremennye tendencii strahovanija otvetstvennosti direktorov i dolzhnostnyh lic’ <https://ao-journal.ru/sovremennye-tendencii-strakovanij-otvetstven nosti-direktorov-i-dolznostnyk-lic-d-o> (accessed: 16.04.2021) (in Russian).