Despite growing interest in the last three years, Czechs still lag behind the West in D&O insurance

Director's & Officer's Liability insurance has been offered on the Czech market for more than twenty years. The biggest increase in interest in this product was due to a change in legislation in 2014. Since then, according to RENOMIA, interest in D & O insurance has grown significantly - the number of insurance policies has more than doubled.

The first products offering insurance protection to chief executives appeared on the local market already in 1996. Since January 2014, when the amended Civil Code and the new Business Corporations Act became legally effective and placed more responsibility with members of corporate bodies and increased risks related to their executive service. In spite of this, insurance of directors and officers of companies is still much less common in the Czech Republic.

"Only about one in ten Czech executives is insured. Many of those who are not insured are not sufficiently aware of their risks of unlimited liability for damage in the event of their misconduct. In Britain or Germany, awareness and D & O is significantly higher - around 40%. Managers of companies often ask actively for the possibility of negotiating D&O insurance, and sometimes it is a condition of their position," says Michal Pilecký, D & O Insurance Specialist for RENOMIA.

D&O insurance is for members of statutory and supervisory bodies of all companies, regardless of size or business. The latest trend in the Czech Republic is that the head of small and medium-sized businesses is also interested in the product.

"Even the management of a small business can make a decision which ultimately causes losses in the range of millions. Compared with this, the annual premium of less than CZK 20,000 (an example for a small company and a limit of CZK 10 million) appears to be a very reasonable cost," adds Pilecký.

Thanks to D&O insurance, members of the corporate bodies can have a piece of mind, even though they have extensive obligations imposed by law, the unintentional breach of which can cause extensive damage.

The insurance itself covers, in addition to the losses caused, the cost of legal representation of insured persons in litigation related to the claim before the court and a number of other costs such as PR costs, investigation costs, consultant costs and bail costs.

The policyholder is the corporation, while the personal liability of the members of the company's bodies is insured as natural persons. The range of insured persons includes, by default, all past, present and future members of the corporate bodies.