When thinking about insurance it is all too easy to only consider the possibility of material loss, namely fire, theft or damage occurring in relation to your stock or business contents. Whilst this is the most obvious of losses, there exists a host of other risks that your business can insure against, that are equally as damaging. Liability and Business Interruption are examples of such risks, but it is also possible to insure against many other common forms of catastrophe.
Companies, Directors and Partners are finding themselves under fire from numerous sources in relation to errors that they may have unwittingly made, especially whilst trying to keep abreast of the increasing burden of regulatory legislation.
Businesses are also open to substantial losses from fraud (especially by employees), disputes with employees, injuries occurring to key personnel, or failure of key customers to pay their debts. All of these can be insured against at relatively low cost, thus ensuring the continued viability of your company.
Directors and Officers Liability
An all too common feature of todays litigation aware society is the increasing trend of personal litigation towards Directors and Managers of private companies which can prove expensive to both the Company and the Individuals involved. Now the consequences of decisions made in good faith can be extremely costly. The Government has seen fit to make examples of decision makers within companies and a survey, even in 1999, noted a 35% increase in the number of Directors being prosecuted. This trend has not abated. You are now open to litigation by Regulators, Customers, Suppliers, Creditors, Employees and more and more Co-Directors.
Fortunately help is at hand and we can provide you with insurance to fend off many of the claims that could be made against you and your fellow officers of the business. We can cover :-
- Directors and Officers liability claims made for actual or alleged acts.
- Cover for non-executive Directors for not for profit organisation s
- Run-off cover for directors and officers following a sale or takeover
- Cover for subsidiaries of your main company
- Payment of defence costs.
In 1997 a driver fell asleep whilst driving for a haulage company. Two motorists were killed. The court ruled that the operations manager should have ensured that his driver adhered to the relevant driving regulations. He had also failed to keep in close touch on these matters with his co-director. Both directors incurred substantial defence costs before being convicted of corporate manslaughter.
Many businesses operate with a book of debtors. What many companies don’t realise is that rather than factoring debts, it is possible to take out insurance to ensure that a high percentage (normally about 90%) of those debts are met, if not by the debtor, then by the insurer. This has a twofold benefit to a business.
Firstly it enables you to safely plan for the future with a guaranteed income unencumbered by the worry of bad debts. Secondly it provides your sales ledger with a value which most banks will recognise, and lend money against. If your bank says No, then we will be happy to help you in the direction of one that wont. We can provide insurance for specific customers that cause you worry, or for your turnover as a whole.
Is Credit Insurance for you ? Well if you can answer yes to any two of the following, then Credit Insurance will benefit your company :
1. Do you supply more than 5% to any one customer?
2. Do you tend to restrict sales growth out of concern for bad debt?
3. Is time wasted because you’re chasing potential sales from potential customers that ultimately do not have the ability to pay?
4. Would dredit insurance help your credit control procedures when chasing difficult payers, knowing that you have the support of a large credit insurer who can assist with these difficult customers?
5. Will your banker be more comfortable knowing you have Credit cover
6. Will it help you sleep better knowing that your most important asset is protected?
Most companies feel quite secure in the knowledge that they have Public Liability Insurance and thus the risk to their business is removed. Unfortunately this security is a little misplaced if you provide advice as a professional, or in a consultancy capacity. In order to protect yourself against litigation from a disgruntled client, you will also need Professional Indemnity insurance, which covers a business in the event that they are pursued by a third party who claims that they have suffered a loss as a result of their professionals negligence.
Professional Indemnity Insurance protects a business against having to pay damages and legal costs should a claim arise.
A normal policy would include:
- Breach of professional duty
- Breach of copyright
- Breach of confidentiality
- Libel and slander
- Loss of documents
A drawing office prepared structural plans for the erection of steelwork. It was subsequently alleged that the drawings contained errors and over £100,000 was claimed for the costs of alteration and the resulting delays in construction.
Businesses are having to cope with a wide range of Human Resource related issues, that are driven by regulatory bodies, both from the United Kingdom and from Europe. Whistleblowing, human rights, racial and disability discrimination to name but a few. The physical and mental welfare of employees is now a major part of everyday operations, and trying to cope with the regulatory minefield is a drain on resources. The responsibility does not just stop at Employment Practice, it continues into Employee Pension Schemes too.
Employees now have far more opportunities to bring action against employers especially with the advent of new regulations like minimum wage, disability discrimination, paternal rights and even data protection.
Fortunately we are here to help. We can provide insurance cover for claims made against management including Directors, supervisors, and managers. Our insurance can help with claims for breach of Employment Practice regulations, whether they be actual breaches or just alleged. We can also help if you are accused (rightly or wrongly) of failure to address a range of issues, such as sexual harassment, racial discrimination, failure to promote staff, and many others.
Furthermore we can provide Pension Trustee Liability insurance which will assist for claims where breach of duty are alleged. Given the complexity of the rules relating to this area, this cover is invaluable if you offer Occupational Pension Schemes/Stakeholder Pensions. Remember that these rules continue to increase in range and complexity.
Your Company can spend many years building up a reputation within your business sector but sometimes it is easy to tarnish that reputation with a poorly handled incident. This doesnt need to be as obvious as perhaps a major fire, but instead could be the publicised loss of a major customer or perhaps an injury to an employee on your premises. Normally it would be necessary to employ the services of a Public Relations company to undo the damage caused by adverse publicity, however that tends to be an expensive proposition, especially if they advocate the use of positive advertising.
Plymouth Insurance Brokers are able to provide an insurance to protect you against just this sort of eventuality.
Cover will include the cost of a Public Relations Consultant to perform crisis management services for up to thirty days. In addition we can provide strategic advice on how to and where to market your positive message. Services provided would include hands on support such as the drafting of press releases, and communications to staff, customers, investors and suppliers.
Normally the policy would be activated in the event of :
- Loss of a major customer
- Loss of intellectual property rights
- Injury to staff or customers on company premises
- Major accidents
- Product recall
Recent research into Business Fraud has found that companies have become increasingly vulnerable from fraud perpetrated by its own employees.
This disappointing fact has arisen because staff have access to infomation regarding company working practices, that enables them to cirumnavigate the security measures that you have in place to protect the company from external influences. The employees are also in a position to be able to hide their actions from your normal security measures.
Many insurances exclude cover against incidents of this nature, especially if it doesnt come to light within a short specified time period. Happily we are in a position to provide cover for :
- Fraud perpetrated by an employee whether it be theft or dishonesty
- Acts committed by an individual or by several working together
- Losses arising from a single incident or a series over a period
Remember that losses of this nature can occur over a very long period of time in small amounts but can add up to a significant loss.
Often losses of this nature originate from employees that have a purchasing role within the company, operating with the assistance of a supplier.