The most important card in Monopoly
Posted on 02/09/2015
There are some who are obsessed with buying the dark blue Mayfair and Park Lane properties, while others prefer to spread their risk over the lower priced properties, opting to own Piccadilly and all the yellows, with the Strand and Trafalgar Square as their rear guard in bright red. However, in our book, it’s the ‘Get out of jail free’ card which is invaluable and it’s not dissimilar to some of the benefits a good directors’ and officers’ (or D&O) policy can provide.
The benefits of a D&O policy
Whilst a D&O policy can’t necessarily keep you out of jail in the event of conviction, it will enable you to obtain legal advice from a specialist legal team without the worry of having to cover the defence costs, which are no longer recoverable in a prosecution case even if you win in court.
D&O insurance policies are becoming increasingly popular, not only with multi-national companies but for all types and sizes of organisation. Directors and non-executive board members now expect D&O policies to be in place as a matter of course.
Directors have to make important day to day decisions to ensure the smooth running of their business; D&O policies can protect against the unintended consequences of those decisions. With the ever growing threat of cyber-crime, leading insurance companies tell us that now is the best time to buy, as premiums are down and negotiation to broaden the scope of the policy is becoming increasingly common.
Insurers tell us that they will react to market needs, and cyber-crime protection is now beginning to come within scope of premiums and policies as related legislation is pending in England and Wales.
Latest research shows that regulators are operating a zero tolerance policy for non-compliance by directors and officers. Regulatory investigations can vary from an investigation by the Health and Safety Executive following an industrial accident, to an anti-bribery and money laundering investigation by the Serious Fraud Office. Whichever regulator is involved, the groundwork for defending the investigation should begin immediately because a case can be heavily influenced at this very early stage. When a case potentially involves individual criminal convictions then directors and officers are individually liable for financial penalties if convicted, but a D&O policy will cover the legal costs of responding to the allegations and in some cases will pay any prosecution costs award.
In our experience early advice can make a significant difference to the outcome of the investigation.
This post was edited by Pauline Munro and Kate Oliver. For more information, email firstname.lastname@example.org.