Brokers face considerable challenges in educating clients about the scope of their directors & officers' (D&O) cover, according to a survey by law firm CMS Cameron McKenna.
The survey of 200 directors found that almost half of directors (45%) are either not familiar with their D&O cover.
Patricia Peter, Corporate Governance Executive at the Institute of Directors (IoD) - which helped co-ordinate the survey - said: "Directors are aware of the risks of the office. It is possible that the lack of confidence in the protection provided by D&O insurance leads directors not to familiarise themselves with it."
Stephen Tester, partner in CMS Cameron McKenna's Insurance and Reinsurance group said: "Where companies feel it is more economical to replace insurance with company indemnities - for example, to cover larger deductibles or reduced limits - they are likely to test the limits of the restriction in section 3.10 of the Companies Act on companies indemnifying their officers against liability.
"We may even see the law being changed in this area, as the Higgs Review recommended that the section should be made less restrictive."
