09 October 2006
Increased Directors’ obligations spur new insurance cover
Marsh has launched a new personal Directors’ and Officers’ Liability (D&O) insurance product in Australia which complements existing corporate cover and bridges multiple and retired directorships.
Ray Armstrong, a Director of Marsh, said the personal policy had been developed in response to the changing liability landscape for Directors in Australia.
“The reality is that we live in a highly litigious society and Directors of companies are increasingly held personally accountable for the performance of the businesses they oversee,” Ray said.
“The law can come to bite a Director at any time – even post retirement – and we believe Directors want to be personally prepared.
“Recent developments have put more pressure on directors.
“A perfect example is the recent High Court ‘Fostif Judgment’ (Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd) which could pave the way for third parties to fund class action disputes against directors.
“Although a company’s existing corporate policy is designed to provide a level of cover for Directors who have claims made against them, there are some instances where the corporate policy may not provide adequate cover or response.
“In a worst case scenario, a director may find that the insurer entirely or partially avoids the corporate policy as a result of the behaviour of another director or officer prior to the policy coming into effect.
“A personal policy, however, cannot be prejudiced by non-disclosure, misrepresentation or breach of policy condition by another director or officer.
“And in the case of a major corporate collapse such as HIH, an existing corporate policy may be exhausted where a number of directors or officers seek to claim on the same policy year.”
Ray said Marsh’s new Personal D&O policy would particularly appeal to retired directors.
“Marsh’s new Personal D&O policy will give retired Directors peace of mind that they control their own financial protection in the event that their former company’s D&O policy does not respond,” he said.
“If a company is wound up after a director retires, he or she may not even become aware that the company’s D&O policy has not being renewed, until a claim is made.”
Ray said Marsh’s FINPRO practice, which arranges and manages professional liability cover, is witnessing a change in boardroom attitude.
“ More than ever before, Directors want to manage the full extent of their exposure and, as a result, we are constantly finding that contract certainty and broad coverage is the most important element of a D&O insurance program,” he said.
Marsh’s Personal Directors’ and Officers’ product is being underwritten by a leading Lloyd’s of London syndicate and it is now available Australia-wide.
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Released by Marsh. Contact: David Lizzio, Corporate Communications (02) 8864 7735, 0402 259 830, or Fiona Gibb (02) 8864 7746.
Marsh, the world's leading risk and insurance services firm, has 26,000 employees and annual revenues approaching $5 billion. The firm provides advice and transactional capabilities to clients in over 100 countries. In Australia, Marsh’s FINPRO division advises clients and manages their risk in the areas of Professional Liability and Professional Indemnity. |
