Insurance for directors and managers gain strength after new law on economic crimes.
Although insurance for directors and executives, known as D&O, has existed in Chile for more than 30 years, it was not of much interest to companies, but the insurance companies that market it say they have seen an increase following the enactment of the economic crime law in mid-August.
D&O insurance
These insurances are contracted by each company for its directors and executives, in the event that an act is committed, by omission or negligence, that produces damages that are compensable, explains Rodrigo Albagli, partner and managing partner of Albagli Zaliasnik.
Need
Although this is an insurance policy that is only recently gaining strength in Chile, in other countries the contracting of these policies is a common practice. Albagli points out that D&O insurance was born in the United States as a result of what is known as the litigation market and that over time indemnities began to be higher and higher.
“When you want to attract talent to your company in a regulated environment, directors and managers can respond with their equity in an unlimited and joint and several manner, this is a solution to guarantee that they will be insured in the event that by omission, negligence or simple error events occur that generate a compensable claim” he explains.
Albagli says that as Chile becomes more regulated and the amounts to be indemnified increase, “these insurances are necessary. In general, it should almost be a condition for a director to sit in a company and exercise his position“.
Source: El Mercurio, September 16, 2023.
