David Meys, commercial director at Coface New Zealand, recently discussed with ‘Insurance Business’ www.insurancebusinessmag.com how trade credit insurance can mitigate the risk of insolvency events that may lead to 𝐃𝐢𝐫𝐞𝐜𝐭𝐨𝐫𝐬 𝐚𝐧𝐝 𝐎𝐟𝐟𝐢𝐜𝐞𝐫𝐬 (𝐃&𝐎) liability claims.
David Meys, commercial director at Coface New Zealand, is drawing attention to a growing concern among local businesses: the increasing presence of insolvency exclusions in directors and officers (D&O) liability insurance policies.
These exclusions, which remove coverage for claims related to financial distress or bankruptcy, are prompting companies to reconsider their risk management strategies.
Risk management gaps for New Zealand companies
Meys noted that while D&O insurance is intended to protect directors, officers, and senior managers from legal claims, the insolvency exclusion can leave key decision-makers personally exposed during periods of financial instability.
In response, he suggested that companies evaluate the role of credit insurance as a complementary risk management tool.
Credit insurance, according to Meys, covers losses arising from customer non-payment due to insolvency or prolonged default, providing a layer of protection for the business itself.
Credit insurance as a safeguard against customer default
Industries with lengthy payment terms or a high concentration of customers may be especially vulnerable to non-payment risks.
Meys explained that credit insurance can help businesses maintain cash flow and reinforce their balance sheets, which may, in turn, support resilience during economic downturns.
Insured receivables are also viewed more favourably by lenders, potentially improving a company’s ability to secure financing.
The link between credit risk and insolvency is straightforward: when a significant customer defaults, the resulting financial strain can be severe, particularly for businesses operating on thin margins.
Without credit insurance, such an event could lead to insolvency and trigger a series of legal and financial repercussions.
Meys pointed out that if a D&O policy includes an insolvency exclusion, directors and officers could find themselves personally liable for decisions made before insolvency occurs. He recommends credit insurance as a way to mitigate these risks, reducing the likelihood of insolvency events that might otherwise result in D&O-related claims.
Market intelligence and decision-making support
Credit insurance providers offer more than just financial protection. They supply businesses with real-time credit assessments and risk intelligence on customers and markets, equipping companies to make informed decisions about extending credit. This risk monitoring can help businesses avoid transactions that may result in losses.
As policy exclusions become more common and claims frequency rises, Meys described the combination of D&O and credit insurance as a practical approach to strengthening both company and leadership protection against financial distress.
D&O insurance trends: Regulatory changes and premium shifts
The conversation about risk management comes at a time when demand for D&O insurance is increasing, driven by a rise in upheld claims.
According to the Global Insurance Law Connect (GILC) D&O Global Trends 2025 report, which surveyed 24 markets, legislative and regulatory changes are having the greatest impact on the D&O market, cited by 74% of respondents.
Environmental, social, and governance (ESG) issues and macroeconomic uncertainty are also influencing underwriting and pricing decisions.
Cyber risk remains a significant factor for nearly half of those surveyed.