D&O Insurance in Germany - The New Legislation Arrives

The New Legislation Arrives

Avocats Dr. Gunbritt Kammerer-Galahn, Franz Janssen, Wolfgang Schaller, Anthony Menzies, James Crabtree

We described in our D&O insurance update of 2 June 2009 some of the recent legislative proposals in Germany on directors' and officers' liability insurance, in the wake of recent crises in the financial sector.

Unlike in many jurisdictions, directors' and officers' liability insurance is not compulsory under German law.  Nevertheless, D&O coverage is expected as a matter of good practice, as set out in the German "Corporate Governance Kodex" ("the Code").  Furthermore, the Code has for some time recommended that listed companies agree in their D&O policies upon an "adequate" deductible to be borne personally by the directors protected by the policy.  By imposing a personal interest on the part of the directors concerned, it was sought to motivate them to avoid claims arising, although the question of what constituted an "adequate" deductible has remained vague.

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