There’s a lot of responsibility that comes with running a business, particularly in a highly regulated business environment like Australia.
“Management Liability insurance should be part of any business’ risk management framework,” QBE National Manager, Professional & Financial Lines, Mike Pryce, said.
“Directors, whether on the board of an ASX company or an SME, are liable for wide ranging issues around the conduct of the business to an evolving, large group of stakeholders including their people, customers, suppliers and regulators.”
The coverage is designed to protect the Directors and the company against financial losses in the event they are alleged to have not met their duties.
“When time and money to be spent on risk management is at a premium, having an insurance policy to protect the business becomes a beneficial safety net. It protects the bottom line,” Pryce added.
Looking after your liability
The risks and concerns for all businesses generally fall into four key aspects; people, finance, regulations and customers or suppliers, according to Pryce.
“Businesses face ever-increasing standards of compliance in the Australian regulatory environment. There are currently about 800 laws and regulations that businesses face to varying degrees.
“And with regulation constantly changing, a company in any industry can be liable for what can often be as simple as making an error in judgement,” he said.
Management Liability coverage can protect companies and individuals against fines or penalties, which can be very costly, particularly for an SME.
Pryce added that an increasingly regulated environment means any business with employees should consider getting the coverage.
“There are tougher obligations on company directors’ and their responsibilities to employees now more than ever,” he explained.
“Employees can bring about numerous areas of liability risks, such as the employment relations area including wrongful termination, harassment and discrimination.”
“There’s also exposure to employment disputes, Occupational Health & Safety and acts of dishonesty such as theft committed in the workplace, by staff or third parties which can seriously impact the bottom line.”
Key drivers in claims
“Even seemingly petty allegations cost a business precious time, money and can tarnish a company’s reputation,” said Pryce.
“Based on my experience I’m seeing Management Liability claims increasing year-on-year in both frequency and severity.”
Crime losses including employee theft is a driver of loss, Pryce explained.
“We’re seeing a rise in financial risks to businesses because the sophistication of theft is increasing.
“Heavy usage of social media platforms has meant there’s an increase in socially engineered fraud and embezzlement in the workplace as we tend to put a lot more information about our personal lives online, creating a very different crime environment.”
Pryce added that statutory liability is also increasingly a driver in claims due to a constantly changing regulatory environment.
“This can place many different responsibilities on a business owner such as environmental, law, workplace health and safety, superannuation as well as responsibilities to their investors or lenders and customers.”
Talk to an expert broker
As business insurance experts, brokers can find the policies that best meet your business needs. How do they work? They’re best described as licensed individuals or firms that serve as intermediaries between insurers and business owners to negotiate insurance policy contracts. So how do you find a good one?
How to buy business insurance
Business insurance is bought through brokers. If you don’t have a reliable personal recommendation, the National Insurance Brokers Association (NIBA)* can help you find an accredited broker.
You should ensure you obtain and consider the Product Disclosure Statement for the policy before you make any decision to acquire it. The information on this website has been prepared without taking into account your objectives, financial situation or needs.
*The brokers on this site are not employees or agents of QBE, but are independent entities. QBE is not responsible for any advice provided to you by any broker on this site. Any such advice is the responsibility of the broker concerned.