History of D&O insurance

D&O insurance has existed since the end of the nineteenth century. However, it was only in the early eighties that D&O became an important insurance product.

Although D&O at first struggled to become a mainstream insurance product, the increasing focus on directors' personal liability has allowed the product to grow in importance rapidly in recent decades.

The end of the nineteenth century

In Germany, the first D&O insurance product was banned by the Imperial Insurance Office on the grounds that it was immoral.

From 1920 to the sixties

Following the 1929 Great Crash in the USA, stock market supervision laws were passed to improve investor protection (SA 1933 und SEA 1934). Lloyd's of London developed a D&O insurance product because companies did not indemnify their directors against claims for compensation.

Until the sixties, the absence of claims and legal frameworks made the product difficult to market. It was only in the late sixties that laws came into being which more strictly defined directors' and officers' personal liability.

The eighties

The Savings and Loan Crisis in the USA resulted in huge speculation losses for savings and loan associations. Limits of indemnity were not clearly defined in D&O policies, and consequently claims payments were high.

Since the mid-nineties

D&O insurance has gained in popularity both in the USA and in continental Europe and Asia. It is now estimated that over 90% of large multinationals buy D&O insurance.

Globalisation, new corporate governance rules and recommendations, the development of a litigation culture and stricter legal provisions relating to directors' personal liability in many countries unite to cause demand for this type of insurance to continue to rise.