Policy Language for Global Programs: Harmonizing Local and Master Directors and Officers (D&O) Liability Insurance Forms

Directors and Officers (D&O) liability insurance for multinational organizations requires precise policy language to ensure consistent protection across jurisdictions. For U.S.-based multinational firms expanding operations in states such as New York, California, Delaware and internationally, harmonizing local policies with a global master policy — while navigating regulatory, tax and enforcement variances — is essential to preserve coverage, control claims handling and manage cost.

Table of Contents

Why harmonized policy language matters

Inconsistent D&O wording between a global master policy and local policies can create:

Coverage gaps that expose directors and officers to uncovered defense and indemnity costs.
Allocation disputes between insurers in different territories.
Enforcement and service of process problems when judgments or subpoenas must be recognized abroad.

A harmonized program aligns definitions (e.g., “Claim”, “Loss”, “Insured Person”), consent and severability clauses, and carve-outs (sanctions, fraud, insolvency) so corporate officers in New York or San Francisco receive predictable protection similar to counterparts in London, Singapore or Toronto.

Program architectures and where language alignment is critical

There are two dominant architectures for multinational D&O programs:

Master policy with local follow-form or difference-in-conditions (DIC) local policies
Local-only policies (local buy) coordinated by the parent

Both have distinct policy-language implications:

Master policy + local follow-form (common for U.S. multinationals)

The master policy sits at the parent level (often written in the U.S.) and sets the primary substantive coverage language.
Local policies either follow-form to the master or provide local layers to meet compulsory regulatory limits or taxes.
Critical language points:
- Follow-form wording must be explicit (i.e., “This policy shall follow the terms, conditions, definitions and exclusions of Master Policy No. … except as otherwise provided herein.”)
- Service of process and consent-to-appear clauses to avoid default judgments abroad.
- Non-imputation/severability to protect innocent directors from co-insured wrongdoing.

Local buy (often in jurisdictions with compulsory local insurance)

Local policies will contain native wording reflecting local law (e.g., EU member states, Brazil, India).
The master policy should contain explicit difference-in-conditions (DIC) wording to fill gaps and state precedence for conflicting provisions.
Key harmonization items:
- Choice of law and jurisdiction — ensure enforceable dispute resolution across territories.
- Foreign investigations and sanctions exclusions must be reconciled so multinational exposures (FCPA, UK Bribery Act, OFAC-related conduct) are addressed consistently.

See practical structuring considerations in our guide: How to Structure a Multinational D&O Program: Local Buy vs Global Master Policy Options.

Essential policy-language clauses to standardize

Standardization should target these core clauses:

Definitions — “Claim”, “Loss”, “Insured Person”, “Insured Company”
Prior and Pending Litigation — consistent retroactive and prior-acts dates across all territories
Allocation/Separation of Insuring Clauses — ensure multi-jurisdictional costs are allocated per a harmonized formula
Defense and settlement control — defined insurer/insured cooperation, counsel selection protocols across borders
Non-rescind/Severability — prevent one insured’s fraud from voiding coverage for others
Extradition, Sanctions, and Export Controls — align with U.S. OFAC requirements and local sanctions laws
Taxes and Stamp Duties — specify who bears local taxes or government levies to avoid surprise costs in New York or California subsidiaries
Choice of law and forum selection — be pragmatic; where enforceability is required, pick local courts or international arbitration.

For details on enforcement and process issues, consult: Jurisdiction, Service of Process and Enforcement: Practical Impacts on Directors and Officers (D&O) Liability Insurance.

Pricing realities: U.S.-focused market indicators

D&O pricing varies by public vs private status, revenue size, and industry (financial services and tech typically cost more). Recent market hardening increased premium baseline across U.S. markets in 2022–2024.

Indicative U.S. annual premium ranges (market snapshots 2023–24):

Small private company (revenue <$10M): $5,000–$25,000 for $1M/$2M limits
Mid-market private company (revenue $10M–$200M): $25,000–$200,000 for $5M–$10M limits
Public companies: $250,000 to several million for primary placements; excess towers add materially

These ranges are consistent with broker and insurer market reports and carrier product pages (see Aon, Marsh and established carriers). Actual quotes depend on jurisdictional operations (e.g., New York vs Delaware incorporations), claims history and the global mix of exposures. Sources: Aon and Marsh market insights and carrier materials (Aon, Marsh, Chubb).

Aon D&O information: https://www.aon.com/home/solutions/risk-finance/insurance/directors-and-officers.jsp
Marsh insights on D&O market dynamics: https://www.marsh.com/us/insights/research/directors-and-officers-liability-insurance-market.html
Chubb D&O product page: https://www.chubb.com/us-en/business-insurance/directors-and-officers-liability.html

For broker-specific benchmarking, Aon and Marsh regularly publish renewal and market trend notes reflecting U.S. premium shifts.

Sample harmonized wording checklist (practical)

Use this checklist when reviewing master and local forms:

Include an explicit “follow form” clause in local policies referencing the master policy number.
Specify which policy is primary for particular claims (e.g., securities claims in the U.S. are treated under the master; local employment practice claims under local policy).
Define allocation mechanics when both master and local insurers respond.
Require mutual cooperation on counsel selection for cross-border claims; set an escalation ladder for disputes.
Include express language on non-duplication of limits or how local limits sit in relation to master limits.
Address tax and stamp duty responsibility in the policy—clearly state whether premiums or insureds bear local charges.

For structuring options and pros/cons of local buy versus master programs, see: How to Structure a Multinational D&O Program: Local Buy vs Global Master Policy Options.

Coordination with claims handling and reinsurance

Harmonized language must consider claims handling across borders:

Pre-agree on lead insurer for multi-jurisdictional claims.
Formalize defense counsel coordination and billing protocols.
Reinsurance placements (treaty and facultative) can impact capacity and settlement authority—insurers like AIG, Chubb, Beazley and Zurich often rely on reinsurance to underwrite large multinational towers.

Practical next steps for U.S.-based multinationals

Inventory all jurisdictions of operations and local compulsory insurance requirements (California, New York, Delaware, Texas can have nuanced corporate law impacts).
Run a gap analysis between the master policy wording and each local form.
Negotiate express follow-form or DIC language with primary carriers (AIG, Chubb, Beazley, Zurich are active in multinational D&O).
Establish a claims governance protocol and a documented escalation path for coverage disputes.
Budget for premium variability — assume continued market sensitivity; obtain multi-year buy options where available.

For cross-border exclusions (tax, insolvency, sanctions) that commonly affect multinational programs, reference: Tax, Insolvency and Sanctions: Cross‑Border Exclusions That Can Impact Directors and Officers (D&O) Liability Insurance.

Closing summary

Harmonizing policy language between master and local D&O forms is not just legal housekeeping — it is a strategic risk control for U.S.-based multinationals. Clear follow-form/DIC provisions, aligned definitions, robust allocation mechanics, and pre-agreed claims governance reduce coverage uncertainty and cost volatility. Work with experienced D&O brokers and counsel familiar with U.S. corporate law (Delaware/NY) and local regulatory idiosyncrasies to implement a program that protects directors and officers across the globe.

External references

Aon — Directors & Officers Insurance overview: https://www.aon.com/home/solutions/risk-finance/insurance/directors-and-officers.jsp
Marsh — Directors & Officers market insights: https://www.marsh.com/us/insights/research/directors-and-officers-liability-insurance-market.html
Chubb — Directors & Officers Liability insurance: https://www.chubb.com/us-en/business-insurance/directors-and-officers-liability.html

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