Why are you buying Side A D&O insurance?

In light of the Enron and WorldCom corporate scandals, many corporations are being advised to purchase stand-alone Side A director and officer liability insurance policies. Notwithstanding this latest trend in insurance risk management, purchasing stand-alone Side A policies may not be an optimal decision given that the risk of a large Side A claim is remote for most corporations. Instead, a better approach is one that relies on a careful analysis of a corporation's risk profile. This paper discusses the scope of Side A coverage and provides a framework of analysis to calibrate a corporation's risk exposure to Side A claims.