Study On The Design And Operation System Of Director Liability Insurance In Germany

In contemporary society, the business environment is volatile and its risks arelurking here and there. If a company’s directors and officers are liable to be blamed atevery move, they will be overcautious and hesitant when making a business decision.Therefore, we should provide a proper risk diversification mechanism for them toreduce the liability risks that may arise in fulfilling their everyday duties. The D&Oinsurance contract is an excellent risk diversification tool. When accidents occur, theinsurer will pay the insured an amount of insurance money according to the contract toease his or her pressure of bearing the compensation liability alone. Both China andGermany fall into the civil law system, and the approaches and spirits of German lawshave been deeply rooted in the Chinese legal system. Early in the1980s, Germany beganto implement the D&O insurance, which, in its early operation, met with the marketfrostiness just like China. However, through periodical system adjustment and productimprovement and innovation, this insurance enjoys a prosperous development in theGerman market. As the Chinese mainland shares similar legal traditions with Germanyand thus can use their experience as reference, the writer plans to approach the systemfrom its development in Germany, introduce and analyze its design features andoperation conditions from the perspective of German laws, and tries to draw lessons andinsights from the transplantation of the German system and its product innovation tobetter this insurance system in our country.Currently, most papers conduct a study on the German D&O insurance merely byfocusing on some of its problems or a single product. To break such perspective limits,this paper attempts to conduct a conclusive study on model clauses about differentD&O insurance products, and analyze and classify insurance products available in theGerman market from the angle of German laws. The basic research in this papermainly includes the following three aspects: first, conduct a basic theoretical analysison D&O insurance, and clearly define its concept, content, development andcontroversies. Second, introduce the legal features of the German system. And the discussion will be mainly focused on three aspects, namely, requirements onprecautions against running risks in the German system, strengthening the legalresponsibilities of directors and officers, and improving the marketization of D&Oinsurance. Third, analyze the legal relations in the German D&O insurance contracts.Based on the model clauses formulated by German Insurance Association (GDV), thewriter would explain the guiding principles in the German insurance market andanalyze the legal relations in insurance contracts. The exploratory study in this paperconsists of two aspects: first, introduce and evaluate the judicial rules and regulationsin resolving insurance conflicts. And a lot of attention is devoted to the judicialstandards of deducting the insurance premium, director liability and insurancepremium management, as well as insurance coverage and exclusion clauses. Second,evaluate the German D&O insurance system, summarize its German characteristics,and predict its road to development and perfection. Last, besides the design andoperation of German D&O insurance system, the writer, in the conclusion, tries tooutline a blueprint for China to learn from the German D&O insurance system.