Directors & Officers Insurance D&O Insurance

DIRECTORS' DUTIES

 
The responsibilities and duties of a director have been established through a mixture of statute, regulations and case law. These duties fall into three main categories :

  Care and Skill - A common law duty requires Directors to carry out their duties with ‘the care an ordinary man would take in the same circumstances on his own behalf’ using the skill expected of someone with his or her ‘particular knowledge and experience’.

  Fiduciary - Directors must act honestly, in good faith and in the interest of the company.

   Statutory - As the regulatory environment becomes more rigorous Directors face an increasing array of statutory duties including, but not limited to:
  Health & Safety at Work Act 1974Companies Act 2006Insolvency Act 1986Environmental Protection Act 1990Money Laundering Regulations 2003Data Protection Act 1998Fraud Act 2006Enterprise Act 2004

IS D&O INSURANCE JUST FOR LARGE COMPANIES ?

 
Directors & Officers Insurance has traditionally been the concern of larger companies, however directors of small and medium sized companies increasingly require this protection.

It is estimated that approximately 70% of the 4million SMEs in the UK do not have any D&O insurance coverage and that the majority are not aware of its existence. As responsibilities become more onerous from both increasing regulation and third party awareness of directors’ duties, D&O insurance cover is becoming more and more common place.

Who might bring a claim :
  Health and Safety ExecutiveA regulatory body or a trade associationHM Revenues & Customs Employees or former colleagues CustomersCompetitorsBanks and LendersLiquidators or Auditors

WHY DO YOU NEED TO CONSIDER D&O INSURANCE?

 
Risk Managers and company directors alike are being forced to take a close look at their statutory duties. The three main reasons behind this are:

The uneasy fact that the company itself will have limited liability (by shares or guarantee) however a director’s personal liabilities are unlimited. It is a common misconception that a director can expect his or her company to provide indemnity. When a claim or allegation of wrongdoing arises, a Director’s personal assets are at risk.

The changing attitudes towards corporate responsibility blame culture and the increase in litigation following physical or financial incidents.
As a result of increased legislation (as detailed above), especially including changes to the responsibilities of directors in the Companies Act 2006.

The fact that whilst a director may not have committed a particular act, the actions of a subordinate can have ramifications for the director. D&O Insurance coverage is often considered particularly important where the company has directors not involved in the day to day management of the company.

Any organisation should consider the risks on behalf of individual directors and the company itself. Perhaps most regard should be considered with risks associated with potential legal proceedings arising from the Companies Act 2006. This says a director must (so far as reasonably practicable) pay regard to:
  the likely consequences of any decision in the long termthe interests of the company’s employeesthe need to foster the company’s business relationships with suppliers, customers and othersthe impact of the company’s operations on the community and the environmentthe desirability of the company maintaining a reputation for high standards of business conductthe need to act fairly as between members of the company

D&O INSURANCE - WHAT DOES CARVEL OFFER?

 
D&O Insurance / Directors & Officers insurance cover is often hard to standardise. Each company or individual director might require tailored cover meaning that a competent insurance broker is required to review and present the case information to insurers and underwriters.

Carvel Insurance Brokers ensure that appropriate D&O Insurance coverage is obtained at the best available cost.

As well as obtaining quotes and advice on Directors & Officers Insurance, Carvel can also provide cover to the company for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors.

Carvel Insurance Brokers are able to obtain D&O insurance coverage at rates which compare favourably to many other forms of liability insurance – the cost often being a small percentage of the company’s total liability package.

Please contact Carvel for a no obligation, informal dicussion.

Directors & Officers Insurance D&O for Small Business, Limited Companies or Multi-million Pound Turnover.
 
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