Why Standard-Setting & Accrediting Bodies Need D&O Insurance

Organizations that establish professional standards or provide accreditation play a powerful role in shaping industries, professions, and public trust. But with that influence comes scrutiny and legal exposure. Whether it’s revoking credentials, denying accreditation, or enforcing compliance policies, each decision carries the potential for disagreement, backlash, or even litigation.

Directors and officers liability insurance, or D&O, protects the individuals behind those decisions. It shields board members and executive leaders from personal financial risk when claims arise against them for actions taken in their official capacity.

When Governance Decisions Lead to Lawsuits

For standard-setting and accrediting organizations, legal challenges may be linked to how they govern and enforce policies. If the organization denies or revokes a certification or downgrades an entity’s accreditation, affected parties may allege bias, mismanagement, or lack of due process.

Regulatory and administrative bodies that issue licenses, accreditations, or credentials must operate within the scope of the statutes that authorize them. As Justia’s Administrative Law Center explains, applicants or license holders can bring legal action when an agency’s denial, suspension, or revocation of a credential appears to violate due process or fall outside the agency’s statutory authority. Courts can deem such actions arbitrary, capricious, or an abuse of discretion — exposures that can trigger D&O claims.

Note that anyone with a stake in your organization’s decisions — professionals, institutions, members, or even government agencies — can bring a claim. Disputes may arise from changes to eligibility requirements, perceived inconsistencies in enforcement, or questions about transparency and fairness. Even unfounded allegations can cause financial and reputational damage if an organization has to defend against a lawsuit. 

Potential Triggers for Claims Against Accrediting Bodies

Standard-setting and credentialing organizations may face legal claims stemming from:

• Credentialing disputes: Professionals challenging exam content, scoring processes, or eligibility requirements
• Disciplinary actions: Members disputing revocation of certifications or suspensions from registries.
• Governance conflicts: Internal board disagreements or whistleblower reports alleging mismanagement.
• Transparency concerns: Stakeholders or watchdog groups questioning decision-making procedures or documentation.

As these organizations become more visible and regulations tighten, the margin for error and the tolerance for perceived unfairness narrow.

What Directors and Officers Liability Insurance Covers

D&O insurance covers legal defense costs, settlements, and judgments arising from claims of wrongful acts, such as negligence, errors in governance, breach of fiduciary duty, or misrepresentation. It applies to both current and former board members and executive leaders, recognizing that exposure often extends beyond an individual’s term.

Importantly, D&O insurance does not cover intentional wrongdoing, such as fraud or criminal behavior; nor does it apply to bodily injury or property damage, which are typically addressed under general liability or other policies. 

But when it comes to protecting leadership from career-altering claims tied to governance or oversight, D&O coverage is the frontline defense.

Protect Your Leaders So They Can Lead with Confidence

Without D&O insurance, board members could be personally liable for decisions made in good faith. Such exposure not only deters qualified professionals from serving but also puts your organization’s credibility and stability at risk.

For standard-setting bodies, credentialing agencies, and accreditation boards, directors and officers liability insurance is a much-needed safeguard.

Contact Moody Insurance Worldwide today to request a D&O insurance review tailored to your organization’s specific needs.

About Moody Insurance Worldwide

We are a specialized, independent insurance agency that provides broad insurance portfolio options for the nonprofit sector and other industries. In addition to essential Property, Liability, and Benefits insurance, we have expertise in Professional Liability, Product Liability, Director & Officer Liability, and International insurance coverage.