Travelers developed a new endorsement that offers additional support to directors & officers who are asked to appear at meetings or produce documents as part of an internal corporate investigation.
PRODUCT: Enhanced Interview Request endorsement
COMPANY: The Travelers Companies Inc.
BEST RATING: A++ (Superior)
AVAILABILITY: Coverage is available through approved independent agents and brokers.
FOCUS: All publicly held organizations—and the people who lead them—are vulnerable to numerous exposures. Directors & officers can be held personally liable for claims, such as securities litigation, regulatory actions, allegations of misrepresentation and other breaches of fiduciary duties.
These allegations often lead to internal investigations. The pace of these claims and investigations is not letting up—and in response, Travelers developed a new Enhanced Interview Request endorsement that offers additional support to directors & officers who are asked to appear at meetings or produce documents as part of an internal corporate investigation.
“Due to the renewed focus on individual misconduct in corporate investigations, it’s important for directors & officers to have broad protection,” explains Shanda Davis, D&O product manager for bond and specialty insurance at Travelers. “Given the current regulatory environment, this is a smart way to make a needed addition to the coverage provided by a public D&O insurance policy.”
Many D&O policies for publicly traded companies provide coverage for defense expenses incurred when directors & officers respond to interview requests from regulatory bodies. However, this new coverage reimburses costs incurred when companies conduct their own investigations before the government gets involved.
The endorsement was created specifically to address the evolving exposures surrounding an increased focus on individual accountability for corporate wrongdoing by the U.S. Department of Justice (DOJ), Securities and Exchange Commission, and other enforcement bodies, as well as the increased pressure on corporations to identify individual misconduct in internal investigations.
Current DOJ guidelines require corporations to help investigate and identify individuals responsible for wrongdoing in order to receive a cooperation credit, which typically includes a financial component.
The coverage, which can be triggered when a company self-reports potential corporate wrongdoing, adds a layer of protection to businesses and individuals at an earlier time in the investigation process.
It also addresses an important area of concern among public company executives: According to a Travelers study, publicly held companies are 60% more concerned than other firms about D&O accusations, but only 30% of public company executives believe their business is properly insured against them.
UNDERWRITING: Travelers D&O policies have a broad definition of "claim," and they cover defense costs, settlements and judgments associated with claims. Travelers D&O policies not only help provide protection for the assets of the organization and the personal assets of its directors & officers, but also help protect the personal assets of a director or officer’s spouse, domestic partner or a deceased director or officer’s estate.
Coverage is available as an endorsement to Travelers’ public company D&O policyholders, with full limits available.
MINIMUM PREMIUM: Varies depending on terms and conditions.
TARGET: Directors & officers working for publicly traded companies.
COVERAGE TERRITORY: Worldwide where legally permissible.
CONTACT: Shanda Davis, D&O product manager, Travelers Bond & Specialty Insurance; 161 N. Clark St., Suite 1000, Chicago, IL 60601; 312-458-6649.
Ronimarie Acord is an IA contributor.
