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D&O insurance to increase following company collapses

  • by The Quotesonline Team

Directors and Officers Liability Insurance (D&O) is set to increase by an estimated nine per cent according to a general insurance survey by JP Morgan Deloitte. This follows a tough year for business which saw a high rate of company collapse in Australia resulting in a dramatic need for Insurance covering directors for legal action from either administrators or regulators.

Most classes of commercial Insurance are set to rise six per cent while premiums for professional indemnity insurance are predicted to increase eight per cent.

JP Morgan’s senior insurance research analyst, Siddharth Parameswaran, commented, ”Quite often after periods of economic stress you tend to see claims in those classes increase very significantly.”

Collapsed companies such as Great Southern, ABC Learning and Babcock & Brown are also facing class actions from aggrieved shareholders. These are likely to lead to long court cases.

D&O is liability insurance payable to company directors and officers or to an organization itself. It covers damages and defense costs in the event of a lawsuit for alleged wrongful acts while acting in their capacity as directors and officers for the organization. However, in most D&O policies the insurer will not pay if there is evidence of fraud or dishonesty.

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