Core Viewpoint - The enthusiasm for purchasing Directors and Officers Liability Insurance (D&O Insurance) continues to rise, driven by the implementation of the new Company Law, which has significantly increased the legal responsibilities of company executives and directors [1][2]. Group 1: Market Growth and Trends - Over 280 A-share listed companies have announced plans to purchase or renew D&O Insurance in the first half of the year, indicating a growing trend in corporate governance and risk management [1][2]. - The new Company Law, effective from July 1, 2024, formally establishes the D&O Insurance system, allowing companies to insure directors against liabilities incurred while performing their duties [2][3]. - A report indicates that 475 A-share listed companies are expected to disclose D&O Insurance plans in 2024, representing a 34% year-on-year increase, with 234 companies disclosing for the first time [2]. Group 2: Reasons for Increased Demand - The heightened regulatory scrutiny and the rise in investor claims have led to an increased awareness of the risks faced by directors and executives, prompting more companies to seek D&O Insurance [3][4]. - The new Company Law expands the scope of liability for directors and executives, which has stimulated demand for D&O Insurance as companies recognize the potential financial risks involved [3][6]. Group 3: Market Challenges and Opportunities - Despite the increase in companies purchasing D&O Insurance, the overall market penetration remains low, with only 23.7% of listed companies having announced D&O Insurance plans by the end of 2024, compared to over 80% in mature markets [6][7]. - Factors hindering market growth include a lack of awareness among companies about the importance of D&O Insurance, insufficient information disclosure, and limitations in the insurance products available [6][7]. - The concentration of ownership in some companies can also limit the support for D&O Insurance from controlling shareholders, affecting its promotion [7]. Group 4: Recommendations for Insurers - Insurers are advised to enhance their underwriting capabilities and expand their coverage to meet the growing demand from listed companies [7][8]. - There is a need for insurers to optimize product design and offer customized D&O Insurance products that cater to the specific needs of different companies [7][8]. - Strengthening risk management and control is essential for insurers to ensure sustainable operations in the high-risk D&O Insurance market [7][8].

Core Viewpoint - The newly revised Company Law in China has led to a significant increase in the number and coverage rate of Directors and Officers Liability Insurance (D&O insurance) among listed companies, with expectations for further growth by the end of the year [1][2]. Group 1: Increase in D&O Insurance Adoption - Nearly 300 listed companies have disclosed plans to purchase D&O insurance this year, with coverage expected to exceed 30% by year-end [1][2]. - The number of companies purchasing D&O insurance has surged due to heightened awareness of legal risks and increased accountability for executives [2][4]. - As of May 2025, the D&O insurance penetration rate among A-share listed companies has risen from less than 8% at the end of 2019 to 28.4% [3][6]. Group 2: Legal and Regulatory Influences - The revised Company Law, effective from July 1, 2024, explicitly encourages companies to purchase D&O insurance and mandates reporting to shareholders, providing a legal foundation for its adoption [3][4]. - Stricter regulatory requirements and a growing focus on corporate governance and ESG (Environmental, Social, and Governance) factors have contributed to the increased purchase of D&O insurance [4][5]. Group 3: Market Potential and Challenges - Despite the growth, the current D&O insurance coverage rate among A-share listed companies remains low, indicating substantial room for market penetration [5][6]. - Factors such as budget constraints, lack of risk awareness, and a tendency to underestimate potential risks hinder further adoption of D&O insurance among some companies [5][6]. - If the coverage rate reaches 85% by 2030, the total D&O insurance premiums could amount to 7.62 billion yuan from 2021 to 2030 [6]. Group 4: Claims and Coverage Limitations - D&O insurance typically covers claims arising from negligence or improper conduct by executives, but does not cover intentional illegal acts such as fraud [7]. - Understanding the policy terms and the specific risks covered is crucial for companies when purchasing and utilizing D&O insurance [7].