Protecting your Assets: Directors and Officers

Financial services have seen a tremendous amount of exposure within the media recently. From tax evasion scandals such as the Panama Papers, to insurers clamping down on fraudulent claims. Something the industry can be sure of, those who are in positions of high authority are, more often than not, being held accountable for the wrongdoing of others.

As a Director or Officer of a company, it is your fiduciary duty to ensure compliance, due diligence and adequate products are being presented to the market. Our broad range of knowledge has led us to compile a quick 2 minute guide to the importance of D&O liability.

As a result of the media coverage and distribution of specific information, financial institutions may not be deemed to be on notice of potential wrongdoing. Prosecutors and bank regulators are likely to issue information requests and witness summonses.

Following assessment of the results of the investigation, and in the event that wrongdoing is in fact uncovered, a voluntary disclosure to regulators or the appropriate government agency should be considered to attempt to minimise criminal and civil exposure and fines.

Financial institutions are likely to face high costs conducting their own internal investigations, responding to government witness summonses and other demands, and possibly defending a shareholder lawsuit and any customer or client claims.

D&O liability could be the first line of defence ensuring that the officers’ personal assets are not liable.

Businesses should be aware of the common conduct exclusions, that deny coverage for intentional conduct, such as fraud and self-dealing.

If such an event occurs, you must notify your broker immediately in order to be provided with adequate instructions to deal with your claim.  As with all insurance policies, you must adhere strictly to the directions provided.

Voluntary payments made will be excluded from being paid out if they have been processed without the insurers’ knowledge or consent. By involving your broker and insurer, you are maximising the potential amount covered.

As discussed in our blog last week, it is not illegal to invest in offshore territories. But what happens if one of the directors at your company is involved in such scandal?

There are several aspects of reputational risks cover can be arranged for including;

  • Reputational management
  • PR disaster recovery
  • Crime cover
  • Legal representation costs

It is important to review your policies every 2-3 years, not only to get the best price, but also to ensure the cover you and your business need has been placed.

Each business is different and ensuring you have the comprehensive cover in place vital for the continuity of your business. Using a broker will afford you the opportunity to assess the risks associated with your daily operations, and place a successful risk management and business interruption plan in place in the event of unforeseen circumstances.

Call us today to see how we can help protect you and your company’s directors.

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Adler Insurance

Content creator for the Adler Insurance Group.