The Role of the Directors’ and Officers’ Insurance Contracts in Corporate Governance

Akhmed Esendirov and Maxim Inozemtsev ()
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Akhmed Esendirov: Moscow State Institute of International Relations (MGIMO University)
Maxim Inozemtsev: Moscow State Institute of International Relations (MGIMO University)

Chapter Chapter 20 in Technology and Business Strategy, 2021, pp 275-284 from Springer

Abstract: Abstract The chapter compares analytical approaches to determining the impact of director’s liability insurance contract on corporate governance. The role of the insurance contract as an advanced business strategy is analyzed in relation to two models of corporate governance: the outsider or distributed equity system (Great Britain, the USA), and the insider or concentrated equity system (Russia). The chapter examines the direct and indirect impact of purchasing an insurance policy on the system of relationships between corporate governance participants and identifies the general positive function of liability insurance for members of corporate governance bodies associated with the assessment of the company and the corporate governance system by the insurer when disclosing information by the insured for proper risk assessment. It is concluded that there is an inverse relationship: influence of corporate governance on the liability insurance contract of members of management bodies. The better the corporate governance system of the company in a digital uncertainty is arranged, the better the negotiating capabilities of the policyholder and the more chances to agree on the most optimal terms of the contract. At the same time, there is a negative function of making such a contract, namely, the degree of the threat of opportunism of members of the governing bodies and ways to reduce it.

Keywords: Corporate law; International corporate governance; D&O insurance; Directors’ and officers’ liability insurance; Business strategy; K10 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-63974-7_20

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DOI: 10.1007/978-3-030-63974-7_20

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