Why Directors And Officers Liability Insurance Is Important

Categories Business InsurancePosted on

With the recent appointment of Gharfur Barchia as non-executive director, Chair of our Board, we have been reflecting on the importance of Directors and Officers Liability Insurance.

The risks associated with Director and Officer roles are high. Key individuals like Gharfur “guide the ship” and make critical decisions that shape the future of companies. So what happens when mistakes happen? And unfortunately they do! That’s part of business.

So, let’s explore why Directors and Officers Liability (D&O) Insurance is important and why every organisation with a leadership team and Board must regularly review its D&O policies.

(And it is a great time to review your D&O policy, as capacity within the market has recently expanded, meaning increased competition and competitive premiums.) 

1. D&O Liability Insurance is important for asset protection

Australia is one of the most litigious countries in the world, and Director and Officer disputes are no exception.The sector is anticipating new emerging exposures such as greenwashing, cybercrime, and climate change. All of these will result in an increased number of claims against Directors and Officers, who can be held personally liable for their decisions and actions. This is where the right D&O insurance becomes crucial.

The right cover provides Directors and Officers with financial protection, including legal expenses, settlements, and judgements (in-line with the coverage level). It protects them from the risk of losing personal assets, including their homes and savings.

So whether you are a company that has just hired a new Chair (just like us!) or you are a newly appointed Director, ensure all these assets are protected with the right level of D&O. 

2. D&O Liability Insurance is important for Boardroom decision-making

Getting robust Boardroom conversation underway and decision making done, requires solid information, trust and peace of mind. As the market experiences more and more failures in securing customer data, which results in an increase of D&O cyber claims, things like the Boardroom trust and peace of mind can fade.

In this landscape, when Directors and Officers know their assets are comprehensively protected, they can make decisions based on the best interests of the company, without fear of personal consequences. This promotes confident decision-making and fosters a more proactive and innovative boardroom environment.

The right level of cover also demonstrates that the organisation takes corporate governance and risk management seriously. Not to mention the benefits that the right D&O insurance liability policy provides for hiring prospective key members.

3. D&O Liability Insurance helps to attract and retain talents

Hiring the right talent is a complex achievement. When it comes to Directors and Officers, this is even more complex, considering the high level of responsibility involved. That’s where Directors and Officers Liability Insurance becomes vital.

Prospective Directors and Officers are more likely to consider organisations that provide them adequate protection, because they will feel more protected. D&O insurance enables companies to do exactly that. It helps them stand out in the job market, attract and retain top-tier talent, and reassure them about their personal liability exposure.

At Omnisure, we have over 50 years of combined experience in financial lines insurance, and we have been involved with numerous ASX listed companies from start-up, through listing. We offer a personalised approach to small cap ASX listed businesses.

So, when you need professional and customised D&O insurance advice and want to get a quote, give us a call on (02) 9959 2900, or alternatively, contact us here.