Demand for professional liability insurance policies for corporate managers has risen 4-5 times this year, say companies and insurance brokers, but most policies are sealed for low insured values.
The reason is the modification of the law on trading companies, with the sealing of such policies becoming compulsory for companies' management.
"In the last 3-4 months, we handled 10-15 professional liability insurance contracts for managers, whereas just a few of the biggest companies in Romania had insured their managers last year," explains Eduard Simionescu, a department manager with Marsh Romania, the second biggest broker on the market in terms of placed contracts.
In general, he says, these are policies with small insured sums, of several tens of thousands of euros, but the broker also includes customers insured for 1-1.5m euros in its portfolio.
The professional liability insurance for managers, or as insurers call it, D&O, (Directors & Officers Liability) covers financial losses caused by managers and executive officers to shareholders, investors, employees and other third parties following errors and negligence in the running of the company.
Besides covering the financial loss generated by the manager, the insurance company also covers expenses related to his defence in court, however only in the case of civil trials.
The policy can be bought for a single member of the management team, but in most cases it insures all the managers of a company.
For an insured sum of one million euros, the premium ranges between 5,000 and 15,000 euros per annum, according to Marsh manager. The price of the policy depends on the company's turnover, profitability, track record, on whether it plans to merge with another company or make an acquisition on the market it operates on.
Allianz-Tiriac also saw demand for professional liability