Personal CRO D&O insurance is suitable for interim managers at companies undergoing restructuring due to threatened insolvency or out-of-court settlements who wish to provide for their own protection (possibly in addition to inadequate or collateral D&O corporate insurance arranged by the company in crisis).
What is insured?
The insurance cover is similar to D&O corporate insurance. The main difference is that only one person is insured and no other person can access the insured amount.
If an interim manager is accused of breaching obligations and a claim is made for compensation for the financial loss resulting from the alleged breach (insured incident), it is the task of the D&O insurer to examine the liability issue, to defend against unjustified claims against the manager and – if the defence fails – to pay out the compensation on behalf of the manager.
In addition to these typical functions of third party liability insurance, there are generally also other cover components that can protect the manager in certain situations (e.g. criminal-law protection, cost of reducing reputational damage, etc.).
Typically, interim managers do not have a contract of employment with the company they work for. In formal terms they usually have consulting contracts: depending on the scope of the consulting contract it is necessary to check whether third-party financial loss insurance is required for consulting services in addition to the personal CRO D&O insurance.
Who is insured?
Insurance cover can be extended to interim managers of companies who are facing insolvency proceedings or restructuring through out-of-court agreements (Chief Restructuring Officers, Liquidation Managers, etc.). From a legal perspective, such managers must perform an “organ-like” function (CEOs, Directors, General Representatives, etc.) The insured person (and policyholder, but not necessarily the premium payer) is generally solely the relevant interim manager in the insured function identified.
Who provides the insurance?
At present there are barely a handful of insurers among the many D&O insurers in Germany who are capable of offering CRO D&O individual insurance cover. As a result, the insurance sums currently available “per person” do not even come close to the amount that companies can purchase. If necessary, it is possible to purchase additional insurance cover through typical “excess carrier insurance companies”.