Revised Companies Act Affects Business Liability Insurance
The introduction of the revised Companies Act and the advent of the King III Code
on Corporate Governance has necessitated that companies review their insurance cover, specifically with regard to Directors and Officers insurance.Accountability
Increased accountability serves to make the general public aware of companies' workings. It also serves to heighten awareness for the rights of recourse the public can take against a business and its stewards when a situation has not been conducted in a responsible and ethical manner.
Directors and Officers (D&O) Insurance
Because of this heightened accountability, the personal risks for business owners and reputational risks for the business itself are significant. The good news for businesses and their stewards is that these risks can be lessened through comprehensively structured business liability insurance options, specifically Directors and Officers insurance.
William Croxton of SATIB Insurance Brokers says, "At its roots, D&O insurance insures 'behaviour' in that the decisions of directors and officers are the matters that often lead to claims. That is, an incorrect decision often leads to public and/or shareholder discontent and, thus, a lawsuit against the directors and officers who made the decision. Even innocent errors in judgment by executives will bring D&O insurance to the forefront of the matter; especially because most "D&O" claims are settled before going to trial."
Overview of D&O Insurance
It covers damage or defence costs in the event of a lawsuit against a company for alleged wrongful acts by the directors or officers.
This business liability insurance coverage can also extend to defence costs arising from criminal and regulatory investigations/trials. Often, civil and criminal actions are brought against directors/officers simultaneously.
Local D&O insurance encompasses two predominant clauses, commonly known as Side A and Side B:
Side A deals with the personal liability of directors and officers
Side B addresses a company's reimbursement where the organisation has indemnified the director or officer.
Other Business Related Insurance Products
Buy & Sell
All businesses have a unique set of financial requirements which need to be managed in times of crisis. Buy & sell agreements can help as they provide a legal document, which ensures that the business is not thrown into disarray if one of the stakeholders dies or is permanently disabled.
Buy & sell agreements preserve the continuity of business ownership. They are designed to protect the shareholding of the partners or owners by providing the remaining shareholders the funds to purchase the shares of the deceased or disabled partner.
Key Person Policy
A key person policy is life cover that is taken out by an employer to insure the life of a key individual within their organisation.
This key person would be someone within the business who significantly enhances profitability.This cover ensures the continuation of the business should this key person pass away or become permanently disabled.
It does this by providing bridging finance to replace that person without suffering financial losses, absorbing business disruptions, and funding the recruitment and training of a suitable replacement.
Personal Liability
Businesses incur debt and shareholders generally have to sign surety for these, which creates certain business and personal risks.
Personal liability insurance provides cover for any sureties that have been signed by business stakeholders in the event of their death or disability.
This cover also protects the business and the estate from creditors by settling the debt and allowing the business to operate without the burden of potentially catastrophic debt.
Personal Life & Disability Cover
As a responsible partner and parent, it is important to be prepared for every eventuality, even death and disability.
Your family's standard of living could suffer in the event of death, disability or dread disease of one or both of the breadwinners.
Personal Life and Disability cover provide the funding needed to continue supporting your family if you are unable to work due to illness or injury and it ensures that major debt items such as home loans and car repayments do not cripple them financially.
Retirement
After a lifetime of hard work, retirement should be about enjoying a relaxing and well-deserved break but it can become a distant dream if the retirement funding that has been put in place is insufficient and basic needs cannot be met.
Retirement cover allows for the investing of small amounts on a monthly basis, accumulating the required amount for the desired retirement date.
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