Directors & Officers Liability Cover
D&O Liability Insurance provides financial protection for the Directors and Officers of a company in the event they are sued in conjunction with the performance of their duties as they relate to the company. Since a Director can be held personally responsible for acts of the company, most Directors and Officers will demand to be protected rather than put their personal assets at stake. Fortunately the enormous responsibilities facing business leadership need not go unprotected: Section 78 (3) of the new Companies Act allows for the indemnification of Directors and the purchase of D&O liability insurance. Think of Directors and Officers Insurance as a management Errors and Omissions policy.
Why you need it
King III and the introduction of The Companies Act in 2008 has rendered Directors’ and Officers’ Liability Insurance crucial for all companies regardless of size or incorporation. Directors and Officers now find themselves in a far more onerous position than ever before, with legislation holding them more accountable for any wrongful act or negligent actions, as well as breaches of their fiduciary duties.
Moving South Africa in line with international trends of Alternate Dispute Resolution (ADR), the King III Report recommends that ADR clauses be included in all business contracts. It suggests that mediation should be used as a management tool and as a dispute resolution instrument that allows for efficient, cost-effective and private settlements. The Camargue D&O product comes with the use of dispute resolution services. A director would have already covered that aspect of his/her duty toward the company by purchasing the insurance policy.
The Companies Act No. 71 of 2008 also changes the business landscape substantially, as far as the incorporation, administration and management of companies is concerned. Ushering in a new era of uncharted territory for Directors and Officers in South Africa, no person should consider taking up a position as a Director before ensuring that there is a Directors’ and Officers’ Liability insurance policy in place. When a board of directors is assembled, Directors and Officers Liability insurance becomes mandatory.
Camargue’s unique M3 approach to insurance is geared towards managing, mitigating and migrating critical business risks – an outcome achieved through the provision of value-added risk benefits to policyholders. Notwithstanding the coverage provided in terms of the policy, the additional risk management benefits further enhance the Camargue product offering and go way beyond simple insurance. The overall result is a well-rounded and complete solution to the risks faced by businesses.
Risk Management Services included in the Policy Cover:
- Membership of the Institute of Directors (IOD)
- Corporate governance surveys
- Access to TOKISO Dispute Settlement: This service will assist in decreasing the cost and time of litigation, and most importantly reputational risk
Camargue: redefining the boundaries of risk management, now and into the future.
What we cover
- Past, present and future directors, officers, prescribed officers, and employees acting in a managerial or supervisory capacity covering:
- Legal defence costs
- Investigation costs
- Following an allegation of a wrongful act, including (but not limited to):
- Breach of duty
- Brought about by:
- Stakeholders such as (but not limited to) employees, trade unions, government, creditors, competitors, and suppliers
- Any other affected party
- The Policy also covers the company:
- When it indemnifies a Director or Officer
- For securities litigation