Regulatory Investigations Top List of Directors’ Concerns in Willis/Allen & Overy Survey

The liability risks facing company directors and officers are intensifying in the wake of the economic crisis, with regulatory investigations and enquiries posing the greatest perceived threat to companies and their directors. This is according to a new report released today by international legal practice Allen & Overy and Willis Group Holdings (NYSE: WSH), the global insurance broker.

The 2011 Directors’ Liability Survey surveyed more than 100 individuals, comprising directors, in-house lawyers, risk and compliance professionals, the majority of which are UK-based public and private companies, about their experience of claims, their current levels of protection and their concerns around risk going forward.

The study observes that the combination of heightened public and shareholder scrutiny, and a proliferation of powers amongst, and growing interaction between, regulators globally means the spotlight is on directors and officers like never before.

Other key findings of the survey also include:

• Criminal and regulatory fines and penalties were the second biggest worry, identified by 64 per cent of respondents as a significant risk to their business.
• Some 20 per cent of respondents had already experienced a claim or investigation involving a director of their company. This is perhaps surprising given the usual perception of the UK’s relatively benign litigation environment.
• A third of those affected made a claim under their D&O insurance policy, and 35 per cent sought indemnity from their company, suggesting almost equal take-up of insurance and indemnity protection.

The majority of those surveyed said the biggest concern was potential exclusions in their existing D&O policy that could leave directors exposed should they come under investigation. Commenting on the survey, Francis Kean, Executive Director of FINEX, the financial and executive risk division of Willis, said: "We wanted an accurate snapshot of the extent to which the actual or perceived liability risks faced by directors of large companies and whether those directors believe they are adequately protected by insurance and indemnification solutions. The survey contains some compelling findings from this perspective."

Andrew Barton, Counsel at Allen & Overy, said: "The financial crisis has thrown director risk and liability into the spotlight. It's clear that the increasingly tangled web of international regulation stemming from the financial crisis is causing directors and senior executives real concern and directors need to be clear about how far their cover extends. "

About Allen & Overy

Allen & Overy is one of the world’s leading international legal practices with a network of 39 offices in 27 countries. Our full-service capabilities are delivered by over 5,000 staff, including approximately 500 partners worldwide who work in a highly-integrated manner, both across our own office network, and with our partner law firms in over 100 other countries.

About Willis

Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world. Additional information on Willis may be found at www.willis.com.