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4 keys to protecting your executives abroad

By Keith Riccio and Ryan Nava |Nationwide

U.S. multinational enterprises employ approximately 32% of their total workforce overseas. For executives, this means making high-stakes decisions in multiple jurisdictions, where local regulations and liability risks vary. Long-term stability in global operations requires that executives working abroad are protected by the right Directors and Officers (D&O) insurance coverage.

D&O policies can safeguard company executives from personal financial loss if they are sued for decisions made in their official capacity on behalf of the company. D&O claims often stem from securities and class action lawsuits, which can be filed in multiple domestic or international jurisdictions. While many D&O policies are structured as “global” solutions, each policy must comply with jurisdictional requirements. Otherwise, executives — and their assets — are vulnerable. For example, some jurisdictions mandate coverage be placed under locally admitted policies, or issued by an insurer licensed in that country.

At the same time, the D&O insurance market is tightening, making it harder to secure the right coverage. Insurers are facing elevated claim expenses — with the highest annual figure in securities class action history hitting $4 billion last year. Many insurers are responding by raising premiums, limiting coverage and withdrawing from heavily litigated markets.

As a result, the current D&O landscape is becoming increasingly complex, especially as more companies expand globally. Understanding the factors that impact D&O protections is crucial for organizations navigating these challenges.

Here are four considerations every company considering or currently entering global expansion should be aware of as they search for the right D&O insurance partner and policy.

1. Some jurisdictions require locally admitted policies.

Countries have specific rules for executive indemnification, similar to how specific U.S. states and Canadian provinces regulate insurance differently. Some jurisdictions require D&O policies to be issued by a locally licensed insurer for compliance and local claims payout. For example, many European countries require locally admitted policies for U.S. companies, and even U.S.-domiciled organizations in Canada or Quebec may face additional regulations. In Quebec, some policies require defense costs to be outside the policy limit, meaning executives without locally admitted coverage could face unexpected costs beyond their D&O policy limit, which they relied on to protect them in the event of a claim. The financial risk for executives increases if these costs are not properly managed or covered locally.

Dual-listed companies, such as those on both the U.S. and Canadian stock exchanges, are subject to both countries’ securities laws, requiring compliance with each nation’s disclosure, reporting and governance rules. Locally admitted D&O coverage is essential for these companies to ensure compliance with local legal requirements.

2. D&O policies can have tax implications.

Tax laws vary from country to country. Understanding these local tax regulations not only ensures the company’s D&O policy provides the right coverage for executives but helps the company avoid penalties and tax audits abroad. For example, in jurisdictions within Europe or Asia, local tax regulations may require D&O policies to be locally admitted. In others, where non-admitted insurance is allowed, there still may be additional tax obligations for the company. Failure to properly file these taxes can lead to penalties, audits and other compliance issues. A locally admitted policy helps avoid these complications and keep local executives protected.

3. Global litigation trends are changing.

The U.S. has been long known as the most litigious country in the world, and this is reflected in the higher cost of D&O premiums for domestic domiciled companies. However, international class action litigation is on the rise across the EU, Asia-Pacific and other regions. As legal risks increase in some global markets, securing coverage in these jurisdictions may become more expensive — and necessary. Before expanding abroad, talk to your trusted insurer and broker to understand the class action environment there.

4. Geopolitical risks and market changes will impact D&O policies

The tightening D&O market, particularly in the U.S., is already leading to fewer coverage options and higher premiums. Geopolitical factors, such as political instability, regulatory changes and trade tensions, will likely continue to affect insurance markets globally. For instance, tensions in regions like Eastern Europe or Asia may prompt insurers to raise premiums or limit coverage in those areas. In these cases, a locally admitted policy is not just a matter of compliance, but a strategic necessity to mitigate the risks that come with operating in volatile markets.

Alongside our reputable brand, Nationwide has the ability to ensure your executives are fully protected across all jurisdictions. To learn more about our tailored D&O policies, visit https://www.nationwide.com/business/insurance/management-liability-specialty/.

Keith Riccio, Executive Vice President, Commercial D&O/Private Company D&O, New York, NY

Keith joined Nationwide’s Management Liability & Specialty group in January 2008.  Keith has 20 years of underwriting experience in both FI and Commercial D&O. He began his career at Chubb in 1998 before leaving to work at AIG in 2000. He assisted in the development of Arch’s D&O book from its inception in 2002 and was the lead FI underwriter at Darwin from February 2006 to January of 2008. His responsibilities in these prior roles included developing underwriting guidelines, policy forms, rating worksheets, and securing reinsurance. Keith joined the Nationwide management team in January of 2008 as an AVP in the FI D&O/E&O group. In February 2013 he took over leadership of the Commercial D&O group, and currently oversees both Commercial D&O and the Private/Freedom 360 books of business. Keith graduated from Hamilton College with a concentration in Government and Economics.

Ryan Nava, Senior Vice President, Financial Institutions D&O/E&O, New York, NY

Ryan Nava is a Senior Vice President for Nationwide’s Management Liability and Specialty group and leads the Financial Institutions group. Ryan has over 19 years of experience in Financial Institutions management liability insurance, including the 14 years that he has been with Nationwide. Prior to joining Nationwide, Ryan had worked as an Underwriter in the Financial Institutions group at both Axis Capital and AIG. Ryan holds a Bachelor of Science degree from the Stern School of Business at New York University.