D&O Liability - Part 2 - Claims & Underwriting

D&O Liability Insurance

Where do claims originate?
internal - company itself, shareholders and/or employees
external - customers, competitors and/or creditors
regulatory authorities - ACCC (TPA), Australian Taxation Office (GST), OH&S, Environmental Protection Agency, Crimes Act, ASIC

Historical claims information
Shareholders
Employees
Competitors
Customers
Government
Others
Source: 1996 Watson Wyatt D&O liability survey

Claims in Australia
· contracting parties
· employees
· breach of duties to company/shareholders
· Trade Practices Act
· breach of duties to third parties
· takeovers
· regulators

Underwriting D&O...
Key elements in underwriting:
-type of company - private company (Pty Limited) public (Ltd), publicly listed (ASX),
statutory authority
-length of time in business - must be more than two years
-size of assets
-financial performance reviewing balance sheet, profit and loss and cash flow
-occupation
-claims

Underwriting information required
-consolidated annual report including accountant's and director's statements (preferably audited otherwise prepared by an accountant)
-proposal form