DIRECTORS’ AND OFFICERS’ (D&O) LIABILITY INSURANCE: CHALLENGES OF IMPLEMENTATION IN BOSNIA AND HERZEGOVINA
Directors’ and officers’ liability insurance (D&O insurance) is a form of professional liability insurance and one of the key instruments for safeguarding corporate governance, as it mitigates the financial consequences that may arise for individuals from breaches of the duties of care, loyalty, or trust owed to the company. D&O insurance is not merely protective but structurally embedded in modern corporate governance as a risk-allocation mechanism balancing accountability and entrepreneurial freedom. D&O insurance is relatively new in the legal system of Bosnia and Herzegovina and is still rarely used in practice. However, its importance is growing in parallel with the development of capital markets, corporate transparency, and regulatory requirements. The paper analyses the legal nature and function of D&O insurance, complemented by a comparative overview of solutions in Germany and Austria, with the aim of identifying the opportunities and obstacles for its full implementation in Bosnia and Herzegovina. The paper argues for regulatory and contractual adjustments of D&O insurance to new forms of managerial risk and proposes guidelines for the development of an appropriate legal and institutional framework in Bosnia and Herzegovina. The objective is to highlight existing normative gaps and practical challenges in domestic law and to offer proposals for alignment with European standards in the fields of insurance and corporate governance.
Keywords: D&O insurance, directors’ and officers’ liability, corporate governance, German D&O insurance, Austrian D&O insurance.
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