Company directors and senior officers feel that the economic crisis is causing them to be more exposed to liability risks and the threat is likely to intensify in the current New Year. The perception has been highlighted in a new report that has been published by one of Britain’s leading liability and PI insurance brokers.
The greatest threats that have been detected appear to be coming from a greater degree of regulatory investigations and associated enquiries as a result of fiscal and legal tightening during the current economic downturn.
The report was published after a survey completed in 2011 which was directed at a large number of British based companies, both private and public as well as directors, in-house lawyers and professionals who dealt with risk and compliance issues directly.
The survey attempted to discover the degree of protection by PI or liability insurance policies, the experience of claims and concerns felt about expectations and trends for 2012 and the future in general.
The survey reports that the spotlight has been directed more fully on directors and senior company staff like never before. Much of the increase in attention is due to the rise in national and global regulators and the interaction between these institutions combined with higher level of scrutiny from shareholders and the public in general.
One of the key findings outlined in the report is the percentage of cover when a claim or investigation was actually made which involved a leading person in a company. A startling twenty percent of companies surveyed stated that such an investigation had already happened. About a third of those included in the survey sought indemnity protection for the claim while others used their liability insurance policy to deal with either a fine or court costs involved.
One of the major concerns expressed by the companies surveyed was the possibility of exclusions in the indemnity insurance cover which might result in their directors being over exposed in the event of an investigation.
One of the lessons of the survey results according to the brokers who commissioned it was for directors to be absolutely sure what their PI insurance policy actually covered them for.