In response to your article regarding D&O cover that firms should take greater ownership of risk (20 November, Insurance Times) I would caution against a rush to secure alternative forms of D&O cover.

Despite Airmic's efforts, the establishment of mutuals to provide a D&O alternative is untested and possibly illegal.

The temptation to seek alternative risk financing tools to manage exposure could be short sighted and risky for companies and their executives, especially as we expect to see evidence of non-US exposure D&O premiums flattening out.

Alternatives to D&O will never sufficiently protect all areas of a company's risk exposure to meet corporate governance guidelines. Once a director has left the company, or the company is no longer in existence, where would the director be indemnified and by whom? There is no such thing as a standard D&O policy, and the call by organisations like Airmic for standardisation could therefore be detrimental.

I agree that it is imperative for companies to have a thorough understanding of their risk exposure. But when the market is hard and premiums are high, the temptation to source cheaper cover elsewhere could prove a false economy. I would suggest it is at these times that clients need the guiding hand of an expert D&O broker most.

Adrian Jenner
Howden Insurance Brokers