A Study On Directors & Officers Liability Insurance

The Director & Officers Liability Insurance (it is called "D&O insurance" for short) is an effective insurance system which is used to share the liability risk of directors and Officers.Many European enterprise and American companies have learned that it might be taken much risk by director and Officers in the process of working. So there are more and more companies covered against D&O insurance for their directors and senior officers in Euro-American countries. According to a survey which was taken by an American company in the year of 2000. there were 96% American companies and 88% Canadian companies among the consulted companies had insured against the D&O insurance, the insurance rate of biology companies, technology companies and banks were 100%. Thus, the D&O insurance is not compulsory liability insurance in Euro-American countries, but its market share is similar with compulsory liability insurance. It can be said that the development of D&O insurance has became mature in Euro-American countries. However. D&O insurance development in China was started in 2002. the products has just been developed for 9 years in our country. In the view of the development of D&O insurance in our country, the insurance rate of the insurance is far less then Euro-American countries.Due to the development of D&O insurance in Euro-American countries, covering against D&O insurance almost becomes a kind of common custom for companies in there. Many Euro-American companies think that D&O insurance is an effective measure to share directors' and officers' professional risk. Since our country had the accession to WTO. the China's market is opening to the world market, the development of our national economy is linked with the world economy closely. In the process, some of business practices and supervision models in the world market are beginning to penetrate into our domestic market. With the development of economy, there will be more and more foreign companies coming to our country for investing, moreover, there also will be more domestic companies undertake investment go aboard. Therefore, as a common effective measure to share the professional risk in Euro-American countries, the development of D&O insurance in China will be give support that makes our economy merges with the Euro-American market and world market greatly. In China, the insurance companies has just launched on D&O insurance for a short time, they are lack of experience on the product so that the insurance rate of D&O insurance is much lower. By analyzing the legal theory of D&O insurance and the development of the product in our country, the thesis will find out the legal obstacles which hinder the development of D&O insurance, and then put forward the suitable solutions to remove the obstacles in order to make the system of D&O insurance in our country more perfectly.