The good news is that even in the local market, plenty of familiar names can be found to contract the necessary coverages. “Demand for D&O has increased considerably in recent years, and there are plenty of insurance companies that offer this product in Brazil today,” said Paulo Baptista, the head of PrivateEquity, Mergers and Acquisitions department at Marsh in São Paulo.

He recalls that, for a long time, only a limited number of companies offered the product in Brazil.

Today, however, there are about 10 insurers in the market, including big names like Allianz, Chartis, ACE,Chubbs, Liberty and Mapfre.

Companhia Minas Brasil de Seguros, which belongs to Zurich, has a 21% share of the market. But the runaway leader is local insurer Itaú Seguros, which in the first half of 2011 took around 39% of all D&O premiums generated in Brazil.

These insurers are all competing for the custom of a fast-growing universe of potential clients. Competition has helped to drive prices down and to bring ever more companies into the market. “We have seen a reduction of rates between 60 and 70% in the past five years,” Mr Baptista told Commercial Risk Europe. “Today we are working with rates that amount to 30% of what clients used to pay.”

Insurers see great promise in the Brazilian D&O market. Experts believe that the number of Brazilian companies that have D&O policies in place remains small compared to the potential size of the market. But growth has been sharp in recent years.

According to statistics gathered by Superintendência de Seguros Privados, Susep, Brazil’s market supervisor, D&O premiums reached R$147.8m by the end of 2007, a 56% increase on 2009. The pace seems to have picked up even faster last year.

In the first six months of 2011, D&O premiums amounted to R$92.3m, compared to R$66m one year earlier. In fact, the volume of D&O insurance sold in the first six months of the year is just a little below the total for the whole of 2009. It is estimated that premiums closed 2011 at R$180m.

According to Mr Baptista, the soft market went a long way towards meeting the needs of Brazilian companies in this area. “We believed that, once prices aligned themselves to international levels, there would be a huge increase of demand in Brazil,” he said. “And that is what we’ve seen of late.”

Low prices aside, the market has also been given a boost by the more assertive approach of Brazilian authorities towards top managers of large companies. “Brazil’s law is very rigorous when it comes to making natural persons accountable for the acts of the companies where they work,” Mr Baptista pointed out.

“Supervisors and the Judiciary have often taken decisions that get into the personal scope of managers, making them co-responsible for the obligations of legal entities,” he added.

Among the most dynamic pursuers of corporate misdeeds is Comissão de Valores Mobiliários, CVM, Brazil’s securities commission.

In a high profile case in 2010, CVM applied a combined fine of R$2.6m to nine executives from Sadia, a food company, for irregularities.

The body says there are no maximum limits for the fines. It has also been breaking new records in the collection of fines and money from agreements with companies deemed to have failed with their corporate governance responsibilities.

It is estimated that in 2011 companies agreed to pay a record amount of fines to CVM in order to settle their suits without going to the courts. D&O policies in Brazil cover such agreements if executives are personally hit by the fines.

The unpredictability of Brazilian courts also raises the risks faced by managers, Mr Babtista said.

The judicial system is famous for its slow ways and there is plenty of scope to appeal decisions, so suits can be long and very costly. Not surprisingly, policies that cover defence expenses have proved very popular with insurance buyers.

Some high profile cases involving irregularities in financial institutions, have also shed light on a more combative society that looks less willing to accept the tradition of impunity the ruling classes that has for long characterised Brazil.

More concrete worries apply however to the South American country’s fiendishly complicated laws, which have been more actively enforced by the authorities, sometimes to the confusion of companies.

Mr Baptista pointed to the example of Brazil’s complex labour laws.

In some cases, he says, courts have tried to make managers personally accountable for disputes between companies and their workers.

It is not unheard of for managers to be personally nominated by workers in their suits.

Brazil also has some of the toughest environmental regulations in the world, and courts have not been shy to make directors answer for damages caused by their companies.

Mr Baptista told CRE that, because of the complexities that can be found in the Brazilian market, coverage provided by global D&O programs is not satisfactory for many top managers.

“Brazilian executives who work in subsidiaries of multinational groups in Brazil do not want to rely on the group’s D&O programs to feel protected here,” he explained.

“There is also a regulatory problem, as the Brazilian courts often do not recognise the validity of policies agreed abroad.

The best way to guarantee that directors in Brazil enjoy the same level of protection of their colleagues abroad is to have a D&O policy issued by an insurer legally established in Brazil, which knows not only the law, but the practices and culture that we have here.”

D&O products in Brazil differ considerably from their international counterparts, Mr Baptista said, because of the many particularities in the country’s laws. “There are risks here that cannot be found abroad, and insurers have had to adapt their formulas to the local reality of the market,” he explained.

On the other hand, capacity is available for all kinds of industries, including the financial sector.

Mr Baptista said that it has not been difficult to find coverage at attractive price and conditions for bank executives in Brazil, not least because the industry is tightly regulated and gives banks less scope to forgo their risk management responsibilities.

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