Directors are increasingly at risk of being sued individually for alleged professional wrongdoing. It’s possible to make sure they’re protected. Find out all about D&O insurance here.
Directors’ & officers’ liability insurance can protect your senior people against compensation claims made against them by shareholders, investors, employees, regulators or interested third parties. These claims are concerned with alleged acts of professional negligence and not intentionally committed illegal acts.
D&O insurance can cover your directors and key managers from breaches of the criminal law and the civil law as well as infringements of best practice regulations. It can cover your senior people against any awards for damages, fines and legal fees involved in claims made against them as professional individuals. It does not cover your business as a whole.
If your shareholders get together and decide that your financial director has made a misleading statement in your annual report, then they could sue her for professional misconduct. Or else the Health and Safety Executive could bring a claim against your HR director for corporate manslaughter after a fatal industrial accident in your workplace.
The biggest jump in directors’ and officers’ liability insurance claims in 2012 was triggered by infringements of regulations. These totalled 23% of reported claims – up from 19% in 2011 and 16% in 2010*.
Source: Towers Watson
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This article has been compiled using information available to us up to 01.07.15.