Chubb has limited directors' and officers' (D&O) cover to stop businesses funding squabbles over poor business decisions.

Executive protection vice president David Robinson said Chubb would provide full-limit defence costs and indemnity in five specific areas:

  • Shareholder derivative action

  • Employment claims brought by directors and officers

  • Actions for contribution or indemnity by directors and officers

  • Actions taken by former insured persons

  • Action by liquidators, receivers and administrators arising from insolvency of an insured organisation.

    Robinson, who introduced the limitation this month, said companies had the opportunity to misuse their D&O cover by colluding with the executives to sue them to recover business losses.

    "It opens up the policy to abuse and to fund bad business decisions," he said.

    "If one customer abuses this cover, all the others pay for it. So, our reason for limiting cover is to protect our good insureds."

    Robinson said he would like other D&O carriers would impose similar exclusions. But he added that Chubb would be flexible if brokers could suggest other areas where indemnity should be provided.

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