DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE

Changes in legislation, market uncertainty or scrutiny from stakeholders are just a few areas of concern for a modern-day Director or Officer.

As the roles become more complex with higher risks, it is critically important that you protect your personal assets from legal actions for alleged wrongful acts in your capacity as a director or officer.  A key way to protect your personal assets and even the company’s balance sheet is a properly constructed Directors’ & Officers’ Insurance policy.

What is Directors’ and Officers’ Liability Insurance?

Directors’ and Officers’ Liability Insurance (or D&O Insurance) is designed to protect the Directors’ and Officers’ of an organisation against legal action from shareholders, employees, regulators, creditors, competitors, liquidators and others. In some cases, D&O Insurance also protects against legal action from your organisation or other Directors.  D&O insurance can also be extended to cover the entity to protect the balance sheet.

Why is Directors’ & Officers’ insurance needed?

As a Director or Officer of an organisation, you have numerous obligations, duties and responsibilities.  If you breach these obligation, duties and responsibilities, you may be personally liable.

A Directors’ and Officers’ Liability Insurance policy typically protects you against:

  • Damages awarded to claimants
  • Legal costs incurred by you and, possibly, the claimants
  • Fines and penalties assessed by regulators
  • Other expenses associated with the claim

Who are claimants against Directors’ & Officers’?

Common sources of claims against Directors’ and Officers’ are:

  • Shareholders can hold Directors’ and Officers’ liable for numerous wrongful acts, such as misleading/deceptive or inaccurate disclosures, not acting in the best interest of shareholders, misappropriate of company funds, errors and omissions in financial reports and many others.
  • Employee claims can consist from wrongful dismissal, sexual harassment, failure to promote, discrimination, unsafe working environment and other employment related risks
  • Regulatory authorities can conduct investigations and initiate claims against Directors’ and Officers’ for breaches for OH&S, financial markets misconduct, environmental, just to name a few.
  • Creditors, if not properly informed about the organisation’s financial position, can target Directors for any unpaid debts/funds, usually in the event of insolvency/bankruptcy.
  • Others sources can include Clients, Competitors, the Entity or Organisation, other Directors.

What is the cost of an average policy?

The cost of an average Directors’ and Officers’ Liability Insurance policy can vary widely. A small, private company or not-for-profit may pay as little as $1,000 per year. A large, multinational corporation may pay anywhere from $50,000 to $1,000,000’s per year.

Key considerations in the price paid include:

  • The size of the organisation
  • Board and management’s experience
  • The number of shareholders
  • The number of employees
  • The scope of the operations
  • Jurisdictions of the operations
  • Financial strength of the organisation
  • Claims history

Why should I contact KBI?

The KBI team has placed Directors’ and Officers’ Liability Insurance for over 300 public companies in Australia, Asia and North America. We have also worked with dozens of private and not-for-profit organisations.

As experts in this area of insurance, we work closely with your management and board to understand your unique needs. We then approach insurance companies on your behalf, getting a range of coverage and pricing options. Next, we compare these options and present them in an easy to read comparison with our recommendations to you to help you make an informed decision. Finally, we secure the insurance that you select and review it with you when required, depending on the growth and changes applicable to your organisation.

Our Key Directors’ and Officers’ Insurers

What our clients have to say

"We have been very impressed with the service and knowledge provided by KBI; they really understand our business and our clients’ businesses. We recommend them to our clients as they focus specifically on public companies and know the insurance needs at each stage of the business cycle both pre and post listing and across various industries. KBI has an in-depth knowledge of Directors' & Officers' insurance and are one of the few WA brokerages that also understand the insurance needs in Canada & the USA."

Elizabeth Hunt Managing Director - Mining Corporate

<< Prev
Next >>

Contact us now

For more information and on Directors’ and Officers’ Liability Insurance, please contact:

Travis Kenzle
Travis.kenzle@kbigroup.com.au
08 6467 7999

Travis has specialised in Directors’ and Officers’ Liability Insurance for over 19 years. And, he is regularly asked to present on this topic by Corporate Secretaries, Directors, Lawyers and Managers.

Learn even more about Directors’ and Officers’ Liability Insurance

We are passionate and like to believe we are experts on the topic of Directors’ and Officers’ insurance, but don’t take our word for it please explore further. Presented below are several articles that we’ve prepared specifically on the topic of Directors’ and Officers’ Liability Insurance. Please take a look at these articles and contact us if you have any questions or if you’d like to speak further.