More clients may now be able to take advantage of better environmental, social, and governance frameworks thanks to changes Marsh has made to its directors and officers liability insurance packages.
According to Marsh, the improvements show that D&O insurers are more ready to view firms with effective ESG risk management as better risks. ESG has effects on a number of insurance lines, including D&O, which was created to address shareholder, derivative, and event-driven lawsuits in addition to regulatory actions.
In its London carrier-backed Marsh Delta D&O facility, Marsh has added “Side D” entity coverage for regulatory inquiry costs connected to climate-related financial disclosures as one of the policy improvements. Customers who score highly utilising recognised ESG risk methodology, such as Marsh’s ESG Risk Rating tool, but are not publicly traded in the US are now qualified for the coverage, which is generally only offered to companies after a securities case has been filed.
According to Paul Denny, global financial and professional liability practise leader at Marsh Specialty, “interest in our D&O ESG programmes has been fantastic.” “More insurers are willing to reward companies with superior frameworks and better coverage because they realise the link between strong ESG risk management and fewer or less severe D&O losses. This is fantastic news for our clients, many of whom have prioritised developing a solid ESG framework for their companies.
The American International Group, Berkshire Hathaway Specialty Insurance, Sompo International, Starr Insurance, The Hartford, and Zurich D&O insurers’ London market subsidiaries have all committed to take part in Marsh’s ESG D&O project. Participating insurers will consider offering preferred D&O policy terms and conditions on ESG-related exposures to US-based or US-listed clients who work with specific international law firms to review, strengthen, and/or validate their ESG frameworks, according to Marsh. This is subject to underwriting.
Additionally, Marsh has improved its “Side A” difference in conditions (DIC) coverage, which offers protection for individual directors and officers not covered by their corporation and is supported by Lloyd’s. Customers who score well utilising recognised ESG risk approaches may be entitled to additional reinstatement of insurance limits.
Everest Bermuda, an insurer, has agreed to provide Marsh clients worldwide with improved ESG frameworks for policy modifications on Side A/DIC coverage. Increased limitations for independent board directors, explicit coverage for chief sustainability officers, and coverage for associated fines and penalties are some examples of improvements.