Nearly all Plc companies buy corporate Directors Liability Insurance protection because it helps them recruit the best board members and it safeguards shareholder value. It is an accepted element of good corporate governance.
Insurance industry research states that as company size reduces so does the take up of D&O insurance. This is an inverted approach because the smaller the company, the less their assets thus the greater their need for financial support in the event of legal action or investigation.
Directors can also arrange personal cover to sit behind corporate policies for added protection.
Running a business is complex and regulations are constantly evolving, it is difficult to keep pace with changes. The bulk of claims are incurred in legal defence costs, which without the insurance backing, would need to be borne by the company.