Skip to main content

COVID-19 : impact on Directors & Officers Liability Risk and Insurance

By Bas Bozon | May 18, 2020

Early considerations with regard to COVID-19 and the impact on Directors & Officers Liability Risk and Insurance
COVID 19 Coronavirus

Risk considerations (increasing potential D&O risks)

  • Not taking timely measurements regarding COVID-19.
  • Insolvency and therefor D&O liability claims.
  • No timely notifications of non-payment of social taxes.

Insurance considerations

  • Check the cancellation clauses in the D&O policy
  • Check the change of risk language in the D&O policy. Most policies will go into run-off coverage in case of insolvency. Also discuss this potential scenario internally.
  • Check the insured’s obligations in the D&O policy. For example. Does the insured need permission from the insurer before obtaining legal assistance? Be aware of Premium Payment Warranties (try to avoid any discussion on this topic).

Check the insured’s obligations in the D&O policy.

Market considerations

  • Decisions and respond time from underwriters could take more time.
  • Start the renewal process as soon as practicable early as possible.
  • Temporary extensions will be rare and only done on a case by case basis.
  • More information will be required for a renewal and quotations could contain more subjectivities.
  • A lot of industries will experience more difficulties with regard to obtaining coverage, capacity and can expect higher premiums. For example the Retail, Aviation, Leisure, Hospitality and Entertainment industry. NOTE This is not a limited list!
  • Act swiftly with reference to received requests and quotations. Bind covers whilst they are valid in order to secure capacity, avoiding subjectivities, lack of capacity or increase of premiums.

Expected outlook

  • Insolvency exclusions / COVID-19 exclusions (some, not all carriers).
  • Further decreasing capacity and increasing premiums.
  • Financial strength of insures (rating) could drop.
  • Extensive questions from insurers on solvability, liquidity, cash flow and continuity plans (not limited).

Claims and circumstances

Please note that insureds are still obliged to inform insurers as soon as reasonable possible when they are aware of any claim or circumstances that may lead to a claim under their insurance. In case of a claim or circumstance, please contact your broker or insurance company.

Questions every D&O should ask

  1. What discussions have you had within the company or with your auditors as it relates to the impact on your company from the coronavirus?
  2. Will you need to make any impairment charges to your inventory or to any businesses?
  3. Is there a risk of loan defaults or covenant breaches stemming from the coronavirus?
  4. Will there be a need to change your Internal Controls related to your business or supply chain as it relates to the impact of the coronavirus?
  5. How have the changes in demand from customers or products been impacted by the pandemic?
  6. Is the company experiencing supply chain impacts?
  7. Are there employee compensation matters that will result in material costs to the company as a result of quarantines or lay-offs?


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage.

The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates.


Gilles Van Buyten
Practice Leader Financial Lines

Related content tags, list of links Article COVID-19 (Coronavirus)
Contact Us