Carter Newell’s 2nd Edition Guide to Directors’ and Officers’ Liability and Insurance
The 2nd edition Guide to Directors’ and Officers’ Liability and Insurance discusses the liability exposure faced by company directors and officers in Australia, and the extent to which that liability – and the associated costs of defending claims brought against directors and officers – can be indemnified.
It is generally accepted that Directors’ and Officers’ (D&O) insurance cover needs to be arranged by companies for the protection of their directors and officers, without which it would be much more difficult to secure their appointment. This is because claims against directors and officers often involve substantial damages or financial penalties and significant defence costs, and are amongst the most high profile and contentious aspects of third party liability insurance.
It can be argued that D&O insurance is vital to an entrepreneurial society because without it, personal exposure would operate as a disincentive for taking risk when making business decisions, on which innovation and success are often based. The contrary argument is that D&O insurance encourages too many risks to be taken, or encourages litigation against directors due to plaintiffs’ expectations any damages will be indemnified.
The prevalence of class actions and litigation funding continues to prove a challenge for underwriters in evaluating the risks their insureds face.