Aggressive regulatory investigations and civil actions are raising the importance of effective directors’ and officers’ (D&O) insurance, according to Marsh.

A stream of high-profile cases has highlighted regulators’ increasingly active role pursuing companies, bosses and employees over breaches, the broker says in a new report.

“Being the subject of an investigation is a serious matter, and not just for the company. Assurances that directors and officers are covered for legal representation, defence costs and the payment of fines and penalties are critical.”

Marsh says “side B” cover typically reimburses a company for payments to indemnify directors and officers.

But it is also important to ensure protection is available in cases where the company, because of legal issues or financial problems, cannot indemnify them.

Cover for investigations and associated financial losses can also vary significantly across different insurer offerings.

If a prosecution goes ahead, the better policies cover defence costs before any final disposition and within a short period of invoice receipt.

Other areas to consider include cover for appeal costs and actions to overturn orders, plus public relations expenses.

“In all D&O policies, coverage for investigations and any follow-on litigation will be compromised by any policy exclusions contained,” Marsh says.

The report says companies should understand cover periods and notify their insurers when a potential problem arises, instead of waiting until a lawsuit is filed.

“Consider that many a class action lawsuit started with a single individual’s complaint,” it says.