With ever increasing numbers of sanctions being imposed in connection with the war in Ukraine, we have received various enquiries from clients regarding whether their D&O policy will provide coverage in the event that an insured is alleged to have breached sanctions.
Where the insured involved is not themselves a sanctioned individual nor a sanctioned entity (for company securities claims purposes) but instead is alleged to have committed an act or omission in breach of sanctions, we would expect the general situation to be that a D&O policy would provide defence costs coverage or legal representation costs/investigation costs coverage to respond to such allegation. The normal considerations will need to be given as to whether any policy exclusions (such as the conduct exclusion) might apply and, obviously, the particular position of any specific insured will need individual consideration including such matters as the specific allegations made and the terms of any applicable sanctions exclusion on their policy.
It should be noted that we are receiving increasing numbers of Russia/Belarus/Ukraine territory exclusions from insurers, some of which are in very wide terms and go beyond sanctioned matters. Those exclusions are likely also to be relevant to any allegations of breach of sanctions for which cover is sought under any new placements or future renewals.
As usual, none of the above should be taken as legal advice. WTW offers views based on our expectations as insurance brokers. Underwriters may take a different view. In the event that a client requires legal advice, they will need to appoint an appropriately qualified lawyer to advise them.
WTW is unable to advise on the application of any sanction but for further information regarding your D&O insurance, please liaise with your usual WTW contact or the contacts below.
