In her article linked below, Noona Barlow of AIG gives interesting insights into recent claims developments and risks facing directors and officers and, thus, their insurers, including from the likes of cyber, #MeToo and modern slavery.
In my view, (potential) cyber incidents and their ramifications for corporate governance are of particular importance on a global level. Considering for example the GDPR and the specific requirements for the implementation of data management systems in its Articles 24 et seq, it is evident that directors bear responsibility to implement sound governance systems to protect against, respond to and manage cyber incidents, and, failing such measures, might face liability, especially in places like Germany where the typical D&O claim is one brought by the company against its own directors.
I think Noona Barlow makes an important point that these developments underline the need for D&O insurers to change and meet the new challenges, involving wordings, underwriting and risk dialogues as well as claims handling.
Chief among these is cyber, where there has been a significant increase in the number of claims. Although not a direct boardroom risk, cyber breaches within an organisation can give rise to corporate governance concerns. AIG has seen a steady increase in the number of cyber claims we have received since 2013, with 50% of the total cyber claims during the 2013 to 2017 period received in 2017 (see chart). Last year there were around 316 new claims – roughly one a day – and for the first time we have started to see some severity claims within these numbers.
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