Insurance Broking

Directors' and Officers' Liability (D&O)
Current developments

We are currently in the midst of challenging times with the coronavirus crisis, plummeting oil prices and their implications for the global economy. The economy is in shock and has become completely stagnant in parts. The Swiss State Secretariat for Economic Affairs SECO, the International Monetary Fund and various EU member states have confirmed that a recession is on the cards – bringing an economic slump of up to 7.5 percent along with it. The Federal Council has reacted by enacting the “Ordinance on Insolvency Measures in connection with the Corona Crisis.” We expect liability proceedings against directors and officers to increase following dramatic economic downturns, meaning that appropriate insurance to defend against unjustified claims and to provide cover for justified claims will be essential.



Back in 2010, GLKB filed a liability proceeding with the cantonal court against former bank directors, former members of the management and the bank’s former external auditors. The Cantonal Court partially upheld the proceeding in 2015, convicting the individual directors and officers and the external auditors. All the parties involved lodged an appeal against this decision. In 2018, the cantonal Supreme Court referred the case back to the Cantonal Court. GLKB concluded the proceedings by agreeing on a settlement of CHF 5 million in October 2019.


The milk producer Hochdorf appears to have made a good job of mastering the crisis surrounding the acquisition of a majority stake in Pharmalys. The move to sell the stake back has allowed the group to take a key step forward, meaning that it can focus on its strategic business areas. It remains unclear what the legal consequences of the acquisition will be for the former decision-makers on the board of directors and in the senior management team. The annual general meeting rejected the discharge of these bodies for the 2018 financial year, and various major shareholders were then quoted as saying that they were looking into the option of bringing liability proceedings. The case yet again illustrates the considerable risks associated with company takeovers and the risks that go hand in hand with the associated personal responsibility of the decision-makers. If used correctly, D&O insurance policies, in combination with M&A transaction risk insurance, can help to mitigate many of these risks.


We are reporting for the 19th (and perhaps the last) time on the liability proceedings relating to the insolvency of the SAirGroup in 2001. The last ongoing liability proceeding against former Swissair directors and officers was dismissed by the Swiss Federal Supreme Court in its judgment of November 18, 2019. This means that all liability proceedings brought in Switzerland and abroad to date have failed.



Both the initiative and a majority in the National Council and Council of States want corporations based in Switzerland to incorporate respect for human rights and the environment into all their business activities worldwide. The Councils did not agree with the structure of the liability provisions for breaches of regulations that the Responsible Business Initiative sets out for Swiss companies and their directors and officers. The Swiss people are now set to make a decision on this matter at the ballot box.

Swiss civil procedure code (CPC)

In 2018, the Federal Council adopted a bill submitted for consultation for the Swiss Civil Procedure Code (CPC). This revised legislation is designed to make it easier for private individuals and companies to access the courts and to improve enforcement in private law. In particular, it aims to lower cost barriers and the risk associated with litigation costs, strengthen class actions and simplify the coordination of proceedings. Relevant aspects for the persons insured under D&O insurance policies include the group settlement mechanism and the option for group action. The Federal Council has approved the dispatch for the attention of parliament. As the proposals for strengthening collective redress were extremely controversial, they were removed from the bill and are addressed under the motion “Furthering and extending class action instruments.”


According to the Federal Council’s dispatch, one of the stated goals of the legislative overhaul is to strengthen corporate governance in order to reduce the risk that “directors and officers will act against the interests of the company and damage it as well as its shareholders, its creditors and the economy as a whole.” Both Councils settled the last few differences in the 2020 summer session. Shareholders will receive new rights to co-determination and information, which means additional obligations for the Board of Directors. Other amendments concern the Annual General Meeting, share capital, the restructuring of companies limited by shares, and disclosure obligations for commodity companies. The new gender quotas have already been adopted. The Federal Council will set a date for the law’s entry into force.



The market for directors’ and officers’ liability insurance was a soft market for more than a decade. Insurers were offering high capacities at largely favorable conditions and there was fierce competition regarding prices. The market has seen fundamental changes over the last year and a half because both the frequency and the severity of claims have increased. Premiums are also being driven up by risks in Anglo-Saxon regions, particularly for companies with stocks or ADRs listed in the US.

In Switzerland, we are witnessing a trend towards more shareholder activism. The examples of Sunrise or Credit Suisse show how difficult the process of dialogue between publicly listed companies and major shareholders is.

These are all factors explaining why insurers have been unable to manage this business profitably in recent years. Accordingly, premiums are now rising, in some cases considerably. In the first quarter of 2020, the D&O insurance market in Europe (including Switzerland) saw premiums rise by 5 to 70 percent, depending on the industry. The current tension coupled with uncertainty regarding the economic outlook – mainly due to COVID-19 – is another reason for insurers to adopt a more restrictive approach to risk underwriting. When it comes to renewing policies for high or complex risks, being well prepared and entering into discussions with insurers early on remains the best strategy.


Our customers have D&O insurance policies with the below-mentioned average limits of liability (as at April 2020). We have noticed that private companies are purchasing policies with higher limits than they were last year. Otherwise, the limits have only increased slightly. It is interesting to see that more and more companies – including SMEs – are placing international insurance programs. The limits in this area have fallen as a result.



Are you interested in a collaboration or do you have any questions? Your contact person looks forward to hearing from you.

Christian Peters
Head Special Risks

Back to top
Marsh Network