You delicately bring your knuckles to your face to satiate the itching sensation tickling your cornea. The kind of itch that only materializes after countless hours of forcing your eyes to be glued to the department issued Commodore 64. More specifically, glued to your annual Directors & Officers (D&O) questionnaire template. You’ve been assiduously working at finalizing this year’s survey, because that is what is required of the board administrator. You’re torn because you fully understand the necessity of this tedious labor, but your mind can’t help but wander to a world where D&O questionnaires are pre-populated.
What is D&O Insurance?
The Great Depression acted as the kindle that sparked the interest in personal financial protection. It was developed due to the various reforms that had a significant impact on the U.S. financial system (e.g. U.S. Securities Act, Investment Company Act). When these reforms were put in place, current companies had no way to indemnify their directors and officers and from that panic and pressure D&O liability arose.
D&O insurance is financial protection for directors and officers in case a company gets sued because one of their directors or officers are involved in actual or alleged misconduct or neglect to take the action they should have taken.
The current model of D&O liability was developed and facilitated by Lloyd’s of London, a conglomerate of insurance associations. Lloyd’s believed that risk exposure of organizations and management was too great to not have a set policy in place and their proactive thinking led to the first market for D&O insurance.
Who Needs D&O Insurance?
Simply put, all organizations (for profit, nonprofit, private firms, education institutions, etc.) need D&O insurance. Today’s society is quick to serve papers, so not having D&O insurance would put your organization risk.
D&O Insurance covers:
- Directors: former, current and future
- Company defense
- Company financial losses
- Employment practices
- Human resource issues
- Shareholder actions
- Reporting errors
- Misrepresentation in a prospectus
- Failure to abide by laws or regulations
Every once in a while, an insurer will add an extension on a D&O policy. Extensions typically extend the liability to cover things like:
- Administrative proceedings
- Criminal proceedings
- Costs incurred during investigations by regulators or criminal prosecutors
What is Pre-Population and Why is it Important?
What would you give to not only save your eyes from straining, but also save your organization time and money? Pre-populated D&O questionnaires are not offered by 95% of Board Software companies, but Global Governance Advisors (GGA) recently developed a Digital Boardroom Platform (DBP) that fulfills the demand for pre-populated D&O questionnaires and reports. GGA's DBP was created by our own Advisory Partners, who are top advisors to Boards across North America.
GGA built this solution to eliminate the tedious pain-points many companies face when delivering annual D&O questionnaires. No more assembling binders, mailing packages to directors, sending reminder emails or waiting for signatures to return. This solution is the most comprehensive, end-to-end compliance ready platform designed for administrators, board members and officers. By implementing a DBP with pre-population included, you will single-handedly be responsible for spearheading your organization’s efforts to increase efficiency, minimize risk, reduce labor costs and streamline the D&O process.
Voila! Your overview of D&O questionnaires and why pre-population is the route to take. Feel free to browse through the rest of our blog (how about checking out How to Chair a Board Meeting ) for more.