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AIG PassportSM for Directors & Officers Liability
Insurance
Presented by: Hano Pak,
AIGMarch 29, 2007
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OverviewOverview
• Global regulatory environment intensifying
• D&O exposures growing worldwide
• International coverage issues are varied
• Country-specific complexities exist
• Solution: AIG Passport
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Global Regulatory Environment
• Greater cross-border collaboration among regulators
• Increasing sophistication of regulatory systems and governance standards
• Increasing number of regulatory investigations
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Growth of D&O Exposures
• Adoption of U.S.-style litigation and legislation worldwide
• International shareholder class action legislation • Unprecedented marketing by U.S. plaintiffs’ bar
to encourage class actions filed in Europe • Increasingly large settlements against
multinationals• International institutional investors active in
litigation
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Greater Operating Complexities
• Globalization adds to difficulty in operating worldwide
• Possible consolidation of global stock exchanges
• “Translating” international accounting standards and financial information from one market to another
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International Coverage Issues
• Indemnification rules vary across countries• Insured vs. Insured• Run-off requirements• Civil fines• Market practices
Coverage-Specific Complexities
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Disadvantages of Non-Admitted Coverage
• Some countries require locally admitted coverage.
• Many countries do not have clear regulatory guidelines regarding the acceptability of non-admitted coverage.
• Some countries may require the local subsidiary to pay claims. If the policy is non-admitted, this can lead to unintended financial, regulatory, tax or other implications.
• If the local subsidiary cannot legally indemnify the individual director or officer, then the individual may be required to pay the loss.
• Currency restrictions may exist
• Operational risk of the local subsidiary for non-compliance
• Reputation risk of non-compliance
Consult your legal, tax and/or financial experts for details.
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Solution: AIG Passport
AIG PassportSM offers an efficient way for
multinationals to secure D&O liability
insurance aligned with local laws, regulations
and customs worldwide. This includes the
ability to issue locally admitted policies in over
70 countries and jurisdictions worldwide.
Consult your legal, tax and/or financial experts for details.
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AIG PassportSM Process
• AIG companies’ underwriters can provide a single letter detailing the terms of a global D&O program, which includes the base policy and one or more locally admitted policies.
• The underwriter can confirm the binding of the entire worldwide program.• Through a single US-based underwriting contact, AIG local offices are
notified and can issue the underlyer policy to the insured’s international subsidiary or local broker as required by law.
• Limits can be shared with worldwide aggregate, except where prohibited (e.g., in India and Brazil)1
• Claims will be handled by local claims examiners, supported by a New York-based management team that can liaise with the subsidiary’s parent company legal team
• Only offered at renewal• Only available on a primary basis 1 Shared aggregates require execution of an indemnity agreement.
Consult your legal, tax and/or financial experts for details.
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AIG PassportSM Advantage
• Compliance
• Coverage
• Claims handling
• “Limit” Options
• No additional premium*
*Additional premium could be assessed if additional limits are required by law or requested by the insured.
Consult your legal, tax and/or financial experts for details.
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THE DATA CONTAINED IN THIS PRESENTATION ARE FOR GENERAL INFORMATIONAL PURPOSES ONLY. THE ADVICE OF A PROFESSIONAL INSURANCE BROKER AND COUNSEL
SHOULD ALWAYS BE OBTAINED BEFORE PURCHASING ANY INSURANCE PRODUCT OR SERVICE. THE INFORMATION
CONTAINED HEREIN HAS BEEN COMPILED FROM SOURCES BELIEVED TO BE RELIABLE. NO WARRANTY, GUARANTEE, OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, IS MADE
AS TO THE CORRECTNESS OR SUFFICIENCY OF ANY REPRESENTATION CONTAINED HEREIN.
Copyright © 2007.
