International Towers by Zurich adds Side A-only D&O insurance policy

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Feb 01, 2024, 07:55 ET

International Side A policy gives multinational businesses more flexibility in managing D&O risks while helping ensure non-U.S. directors and officers have reliable, compliant coverage.

SCHAUMBURG, Ill., Feb. 1, 2024 /PRNewswire/ -- Zurich American Insurance Company, a member company of Zurich North America, has added a standalone Side A Directors & Officers insurance coverage option for U.S.-based multinational companies with non-U.S. board members and officers. The new Side A-only D&O policy, called International Towers by Zurich Executive Universal Select, addresses a critical need for non-U.S. directors and officers: It helps protect their personal financial assets if they are faced with a management liability lawsuit and their company cannot cover their legal costs due to local laws, court orders or other reasons. These are known as non-indemnifiable losses.

The new policy, the latest addition to the award-winning International Towers by Zurich suite of D&O solutions, goes beyond fulfilling this essential need. The new International Towers by Zurich Executive Universal Select policy helps address a worrisome litigation trend impacting multinational companies and their leaders: the increasing severity of D&O lawsuits and losses in the U.S., part of the phenomenon often called "social inflation."

In the past decade, directors and officers have increasingly been named in filings and lawsuits alleging wrongful acts in their capacity as leaders, such as breach of fiduciary duty, employment practices discrimination and securities fraud. With a traditional International D&O program, where local policies in other countries have their coverage limits tied to the U.S. policy, a single case in the U.S. could deplete a company's entire International Program limit, leaving their non-U.S. directors and officers without any coverage if they are named in a legal action. This new Side A offering guards against the unwelcome prospect of their personal assets being put at risk.

How? The International Towers by Zurich Executive Universal Select policy includes the following:

A Master Policy issued to the U.S. parent that covers Side A D&O risk for non-U.S. directors and officers only. By covering only non-U.S. directors and officers, the limits are insulated from U.S. losses, which are more frequent and severe.
Locally admitted Side A policies, issued by locally licensed insurers, to ensure those non-U.S. directors and officers are covered with policies that comply with local regulations.

These locally admitted policies are significant because each country has its own insurance regulations, and some require the insurer to be locally licensed for coverage to be permissible. If a U.S. policy is not recognized in a given country, a coverage gap can result. This is particularly dangerous with Side A D&O claims where the director or officer cannot have their legal expenses covered by their company. Without locally admitted Side A coverage, directors' and officers' personal savings, houses, vehicles and other assets can be at risk if they face a lawsuit in connection with their role. To remedy this problem, many insurers have included locally admitted policies as part of their primary D&O offering, but the local policies typically have their limits tied to the U.S. primary D&O policy. The International Towers by Zurich Executive Universal Select policy provides a separate limit for losses outside the U.S.

Another differentiator is that International Towers by Zurich policies can be purchased from Zurich without Zurich being the Primary or Lead Side A carrier on the customer's U.S. D&O tower.

"With the increasing severity of Securities Class Action (SCA) claims in the U.S., primary D&O limits are more susceptible to being fully eroded," said Brian Zink, Head of Financial Lines for U.S. National Accounts at Zurich North America. "Having a dedicated non-U.S. D&O limit is gaining importance among our customers for this reason. Individual directors and officers are most concerned about non-indemnifiable loss, as their personal assets are on the line in these situations, so we designed a solution to meet this growing need. Bringing this product to them addresses an exposure that can keep them up at night."

When Zurich North America set out to develop the original International Towers by Zurich offering, they consulted colleagues at Zurich UK, which offered a similar non-U.S. D&O coverage option. The new Side A-only addition in the U.S. takes the next step forward, offering an option that customers can access through their U.S. brokers rather than having to go to the London market.

"Zurich has provided international solutions for almost 50 years in the U.S., and this new Side A-only offering, in addition to our full coverage D&O from International Towers by Zurich, is the latest example of how we listen to our customers and solve for their evolving needs," said Andy Zoller, Head of International Programs at Zurich North America. "Providing it to their overseas directors and officers can help these businesses attract and retain top talent. It helps assure their non-U.S. directors and officers that they'll have the management liability coverage they need, if or when they need it."

Businesses and their overseas directors and officers welcome this discrete Side A coverage for many reasons. Having coverage from local policies through a Zurich International Program can create efficiencies, reducing the complexity of handling payments, claims and communication across multiple time zones, brokers and carrier contacts. The Side A-only option enables customers to insure risks that their individual directors and officers are most concerned about while enjoying potential cost savings over the broader full coverage International Towers by Zurich product.

"We're proud to now be able to offer this focused Side A product," said Spring Uphoff Neely, Head of Strategy & Execution for International Programs at Zurich North America. "And we still offer the original full-coverage International Towers by Zurich product to fulfill broader needs."

International Programs by Zurich (IPZ) has earned a reputation for innovative solutions, winning three awards from Business Insurance in the past two years, including one in 2022 for the original International Towers by Zurich.

Learn more about International Towers by Zurich D&O coverage.

About Zurich North America

Zurich North America is one of the largest providers of insurance solutions and services to businesses and individuals. Our customers represent industries ranging from agriculture to technology. Zurich North America is part of Zurich Insurance Group (Zurich), a leading multi-line insurer serving people and businesses in more than 200 countries and territories. Founded 150 years ago, Zurich is transforming insurance. In addition to providing insurance protection, Zurich is increasingly offering prevention services such as those that promote wellbeing and enhance climate resilience.

Reflecting its purpose to "create a brighter future together," Zurich aspires to be one of the most responsible and impactful businesses in the world. It is targeting net-zero emissions by 2050 and has the highest-possible ESG rating from MSCI. In 2020, Zurich launched the Zurich Forest project to support reforestation and biodiversity restoration in Brazil.

The Group has about 60,000 employees and is headquartered in Zurich, Switzerland. Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information is available at http://www.zurich.com/ and http://www.zurichna.com/.

The information in this publication was compiled from sources believed to be reliable for informational purposes only. All sample policies and procedures herein should serve as a guideline, which you can use to create your own policies and procedures. We trust that you will customize these samples to reflect your own operations and believe that these samples may serve as a helpful platform for this endeavor. Any and all information contained herein is not intended to constitute advice (particularly not legal advice). Accordingly, persons requiring advice should consult independent advisors when developing programs and policies. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this publication and sample policies and procedures, including any information, methods or safety suggestions contained herein. We undertake no obligation to publicly update or revise any of this information, whether to reflect new information, future developments, events or circumstances or otherwise. Moreover, Zurich reminds you that this cannot be assumed to contain every acceptable safety and compliance procedure or that additional procedures might not be appropriate under the circumstances. The subject matter of this publication is not tied to any specific insurance product nor will adopting these policies and procedures ensure coverage under any insurance policy. Insurance coverages underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. Certain coverages not available in all states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers. Risk engineering services are provided by The Zurich Services Corporation.

SOURCE Zurich North America