Study On Contract Of Directors' And Officers' Liability Insurance

D&O is the abbreviation for directors'and officers' liability insurance. The insurances object is the civil compensate liability by the company's directors and the senior officers for the company or a third party. In the 1930s, the system of D&O came into being in USA and at present it is widely adopted by such developed countries as USA, Britain, etc. Peace insurance company opened directors'and officers'liability insurance on January 23rd,2003, which remedy the blank in our country. However, there are many defects in China's contract of directors'and officers'liability insurance, which needs to be further studied and solved.Regarding to policy holder of the contract of directors'and officers'liability insurance, there are three modes as follows:directors; companies or companies and directors. In my opinion, companies and directors should be the best choice at present. The scope of insurance coverage and exemption are the most important parts of the contract of directors'and officers'liability insurance. The coverage is too narrow to meet the demand of the market. It is feasible to widen the coverage, based on the successful experience aboard and the real situation of our nation. Directors, especially directors of listed companies are facing expensive costs when faces lawsuit, so it is necessary to establish a system of advance payment. But the relevant regulations of our directors'liability and prosecution of insurance claims are still not perfect, copying the practice of American easily induced directors'moral hazard. Therefore, we should allow the insurer to make corresponding limits, for example, on the time of payment, the payment terms, and the way of payment, to avoid the misuse of payment system by technical design. It is accord with the development trend of directors' liability insurance to admit the direct claim from a third party to the insurer. But it is also need to avoid the risk of moral problems. So a third party should suffer sufficient evidences to prove its interests damage and the magnitude of the damage, and that the damage is directly caused by directors'behavior when requiring a request to the insurer. Regarding to liability for damages and costs share of the contract of directors' and officers'liability insurance, we can study the mature system of directors'liability insurance. We can solve the dispute resolving procedure before signing insurance contract to make more effectively play of the system of directors'and officers' liability insurance.