In the current, trying times, the pandemic is on top of everyone’s minds and is the main topic of discussion.  With regards to the short-term insurance industry, are we going to see an increase in D&O claims during COVID-19 because of actions taken during this pandemic?


But what is D&O insurance?

Directors and officers liability Insurance (often called “D&O”) is liability insurance that will cover against lawsuits specifically directed to the company’s directors and officers if they are sued with regards to how they perform their duties and responsibilities in the company. This protects directors and officers when they are sued personally and are made personally liable for the acts of the company.

This excerpt from the article written by Angela Jack from the Financial Intermediaries Association of South Africa, FIA reads:

On March 12, 2020, a securities class action lawsuit was filed against Norwegian Cruise Line Holdings by a plaintiff shareholder.  The allegations stated that the company was using misleading sales tactics of providing customers with unproven and/or blatantly false statements related to COVID-19 to entice them to purchase cruises.  This subsequently endangered the lives of both their customers and crew members.

Another D&O claim was lodged against Inovio Pharmaceuticals.  This relating to misleading statements the company made about developing a vaccine for COVID-19 in just 3 hours, artificially inflating the company’s share price and resulting in significant investor losses.

Could we see an increase in D&O claims against companies for failure, or inadequate or inaccurate representations about the impact that COVID-19 will have on the business, stakeholders, and customers?


Consider the following examples:
  • The retail sector allowing panic buying and the failure to cap the number of single stock items being purchased, especially on essential items, is of great concern. Customers with sufficient funds to do a mass shop leave the shelves bare for those who will need to wait until month-end.   Should retailers not be encouraging a sense of community by limiting the number of items per customer?
  • With regards to the provision of hygiene products or protocol. How far does the duty of care go relative to advising employees on matters of personal hygiene?
  • Also, where does the balance lie between the duty of care that directors have around Occupational Health and Safety issues? Compared with the duty of care to ensure a financially sustainable business, able to pay the salaries of their employees?
  • When does healthy competition cross over into anti-competitive behaviour?  Where companies overcharge customers on essential items or selling sub-standard products claiming to be the real thing – as is happening with fake hand sanitisers flooding the market now?


The government has set out a plan and organizations that do not cooperate in implementing the plan could be in trouble.

Many of the questions posed won’t have answers for quite some time.  But for the time being,  we can address what potential cover may be available in the Directors and Officers liability market.

There is no cookie-cutter D&O policy in the market and policy coverage.  Conditions and exclusions vary across the market and from business to business, depending on their needs.  Down the line, we could see an increase in underwriting scrutiny when it comes to pandemic risk, business continuity plans, impact and response plans.

It is very important to consult with your broker and/or legal counsel as to how your D&O policy will respond with regard to your planned and actual response to the COVID-19 crises.

Vinsure brokers provide peace of mind, therefore please don’t hesitate to contact any of our agents to assist.