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Regulatory investigations the biggest threat to U.K. directors, officers: Survey


LONDON—Regulatory investigations and inquiries are the top directors and officers liability risk facing U.K. companies, according to a study.

A large majority, 83.9%, of respondents to a survey carried out by brokerage Willis Group Holdings P.L.C. and law firm Allen & Overy L.L.P. cited regulatory and other investigations and inquiries as one of the biggest threats to companies and their directors.

More than two-thirds, 64.4%, of respondents said that the threat of criminal and regulatory fines and penalties was a major concern, while 63.2% said anti-corruption legislation was one of the biggest risks facing companies.

One-fifth, 20% of respondents, said they had experienced a claim or investigation involving a director of their company.

Respondents were asked to name their top five D&O policy coverage issues.

The highest ranked concern, cited by 71% of respondents, was whether the D&O policy would always respond if there is an investigation involving directors.

More than two-thirds, 67%, of respondents said the ability of the D&O policy to respond in all jurisdictions was a major concern, while 65% cited the concern that the D&O policy terms should be clear and easy to follow.

More than half, 57%, of respondents said that a restriction on insurers' ability to refuse a claim on disclosure grounds was of importance to their business, while 49% said a major concern was that the D&O policy coordinate with the company's indemnification obligations.

“The financial crisis has thrown director risk and liability into the spotlight,” said Andrew Barton, counsel at Allen & Overy, in a statement. “It’s increasingly clear the tangled web of international regulation stemming from the financial crisis is causing directors and senior executives real concern, and directors need to be clear about how far their cover extends,” he added.

Willis and Allen & Overy, both based in London, surveyed more than 100 individuals at public and private companies, mostly in the United Kingdom. Respondents comprised company directors, in-house lawyers, and risk and compliance professionals.