FINANCIAL LINES ACE ELITE PLUS MANAGEMENT LIABILITY INSURANCE

Transcription

1 FINANCIAL LINES ACE ELITE PLUS MANAGEMENT LIABILITY INSURANCE

2 00 The ACE Elite Plus Management Liability policy features coverage and benefits designed to address the serious risks confronting private companies and their management teams.

3 CAN YOU AFFORD NOT TO BE INSURED? There are a multitude of risks facing small businesses in Australia. New legislation is always on the horizon; workplace accidents are now subject to high statutory scrutiny, employment disputes can be expensive affairs, whilst employee theft and commercial disputes are on the rise. Owners of private companies and senior managers can be held personally liable for the consequences of unintended errors arising from their daily actions, or even the actions of their employees. The ACE Elite Plus Management Liability Insurance Policy features coverage and benefits designed to address the serious risks confronting private companies and their management teams. Why do private companies need Management Liability Insurance? To operate a business effectively, managers need the confidence that they are personally protected and their business is adequately covered from a wide range of potential liabilities. The cost of legal proceedings can have a catastrophic impact on the finances of a company, possibly sending the company into insolvency and leaving directors financially exposed. This is set against a challenging economic environment where companies can expect increased exposure to liability and fraud. Employees are aware of their rights, have access to a disputes body and are becoming more litigious. Unfair dismissal and employment related claims are not only bad publicity, but they are expensive to defend in court. In Australia, there is a strict legislative environment with stringent regulatory requirements. Certain laws can impose personal liability on individual directors and officers for misconduct even where they may not have had any personal involvement in a breach. New legislation is regularly being introduced, such as the Work Health and Safety legislation, which has placed an increased responsibility on directors and officers to ensure that their company complies with its health and safety obligations. Failure to do so can result in substantial penalties against the company, with directors and/or senior managers also facing personal fines. Yet, in spite of all this, under-insurance of private companies is an issue across Australia. Few businesses adequately protect themselves and their senior management from the legal consequences of liability that may arise from their business. Are private company directors & officers really exposed? There are over 700 Commonwealth, State and Territory statutory provisions which expose private company directors and officers to liability when their company is deemed to have broken the law. The Work, Health and Safety legislation is a prime example. The revised legislation provides that directors and officers must exercise due diligence to ensure the company complies with its obligations. Failure to do so could mean a company fine of up to $500,000 and personal fines of up to $100,000. If death or serious injury occurs as the result of a breach, the fines increase to $3 million for the company and $600,000 for the individual. The law also holds a wide definition of director or officer. Generally the terms are defined as a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the entity. Not only can decision makers be held personally liable, there are a host of regulators scrutinising them to ensure they act correctly and do not fall foul of the law. This includes APRA, ASIC and the ACCC. Some provisions apply strict liability on directors even when the situation is out of their direct personal control. Claims can be brought against directors & officers from every angle; disgruntled shareholders, customers, employees, competitors and creditors all have a legal entitlement to launch action if they feel such directors & officers have not lived up to their responsibilities. That s why it is imperative to have a robust Management Liability policy that covers a business and its management team from legal costs and resulting fines. 1

4 WHAT AM I AT RISK FOR? The following claims examples illustrate the type of issues recently seen in Australia. Claims can affect a business and its employees, the wellbeing of an individual or group, or even the ability of a company to stay in business. Without the protection of an ACE Elite Plus Management Liability Insurance Policy the company and/or individuals may have been liable for the financial exposures described below. Directors & Officers Liability The insured published a book which was authored by one of its employees and contained statements which referred to the claimant. The claimant alleged that the statements were defamatory and/or constituted a malicious fabrication. The insured bore the heavy financial burden of establishing the truth of the statements in order to defend the claim. The insured was entitled to defence costs that were covered by the Management Liability policy. The insured s customer database was illegally breached and personal information (names, DOB, address and credit card numbers) may have been compromised. The media costs of advising the customers plus the legal representation at the privacy commission investigation were covered by the Management Liability policy. Corporate Legal Liability The insured owned two businesses that provided tourism services. Over the previous two years, economic climate had negatively impacted the profitability of both businesses leading to the insured deciding to sell one of the businesses. After the sale, the purchaser initiated proceedings alleging misleading and deceptive conduct by the Insured in respect of the financial information provided. The defence costs for the insured were covered by the Management Liability policy. Statutory Liability An employee of an insured was seriously injured at work following equipment failure. The company was fined for their breaches of Work Health & Safety obligations after entering guilty pleas on one count. The defence costs and statutory penalty were covered by the Management Liability policy. The insured was charged with four environmental offences due to activity at their business property that affected protected fauna. The proceedings were successfully defended at trial, but substantial defence costs were incurred that were covered by the Management Liability policy. 2

5 WHAT AM I AT RISK FOR? Employment Practices Liability An employee of an insured alleged that her employment was terminated on the basis that she was accused of theft and forced to resign. She also alleged that she was owed money in lieu of notice. The costs in successfully defending the employment claim were covered by the Management Liability policy. An employee of an insured was made redundant and brought an employment claim for unfair dismissal on the basis of racial discrimination. An employment tribunal hearing took place and the defence costs were covered by the Management Liability policy. Employee Dishonesty A significant number of frauds were perpetrated by employees of the insured by creating fictitious invoices for services not provided. The client sustained significant direct financial loss as a result of paying those invoices. The direct financial losses were covered by the Management Liability policy. An insured discovered that a senior accounts manager had been electronically transferring money from a subsidiary company s bank account into her own. The individual had been with the company for five years and was considered a trusted employee. The direct financial losses were covered by the Management Liability policy. Kidnap and Extortion An insured person visiting the Philippines on business was kidnapped and held for ransom. Negotiations were held and he was eventually released unharmed. The cost of a negotiator and consultant were covered by the Management Liability policy. The insured received a threatening that demanded $50,000 or the company website would be attacked. The expenses in investigating and dealing with the threat were covered by the Management Liability policy. 3

6 HOW CAN ACE HELP YOU AND YOUR BUSINESS? Coverage Summary The new ACE Elite Plus Management Liability Insurance Policy features coverage and benefits to address the serious risks confronting private companies and their management teams. This Management Liability Policy is divided into seven modules that include six coverage sections each with their own limit, subject to a policy maximum limit of liability. Directors and Officers Liability: Provides cover for claims against directors and officers for any actual or alleged wrongful acts in the performance of their duties. Cyber Privacy & Confidentiality extension. Unlimited Run-off cover for retired directors and officers. Full limit for investigation and pre-investigation costs. No pollution exclusion for directors and officer liability section. Corporate Legal Liability (entity cover): Provides cover for claims against the company for any actual or alleged wrongful acts. Specific public relations expenses extension. Breach of contract defence costs extension. Tax audit expenses extension. Statutory Liability: Provides cover for investigations, defence and possible penalties that may be awarded for a statutory breach. Emergency defence costs extension. Work health and safety extension. Employment Practices Liability: Provides cover for actual or alleged employment related wrongful acts by or against employees. Contractual liability defence costs extension. Broad definition of employment related wrongful act. Worldwide cover excluding USA & Canada. Employee Dishonesty: Provides cover for direct financial loss to the company resulting from a fraudulent or dishonest act of an employee. Full limit for investigator costs to determine direct financial loss. Worldwide cover excluding USA & Canada. Kidnap & Extortion: Provides cover for loss arising from kidnapping, hijacking, wrongful detention, extortion, cyber extortion and political threat. Broad definition of insured person and loss. Cyber extortion expense cover for threats made against the company. 4

7 WHY ACE? A customer service organisation At ACE, we take the time to analyse and understand our business partners. We assess their true needs and develop plans and products that meet those needs. Through e*placement we provide a fast and efficient way to quote, bind and issue policies. This frees up our Underwriters to dedicate more time to support our business partners. e*placement is a web-based proprietary technology platform that allows our brokers and underwriters to easily quote, bind and generate a policy quickly and efficiently for new and renewing insureds. Local underwriting and claims expertise In Australia, ACE has Financial Lines underwriters in five state capitals and a dedicated team to underwrite Management Liability business. ACE s internal claims department provides expertise in dealing with all types of Management Liability claims. We understand the importance of responding to a claim quickly and in a professional manner. Our claims department provides industry leading service so in the event of a claim our insured s can stay focused on their core business. About ACE Group ACE Group is one of the world s largest multiline property and casualty insurers. With operations in 54 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. ACE Limited, the parent company of ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index. Our Australian Financial Lines claims team are experts in Management Liability. Legal Helpline ACE recognises that having a claim is often a stressful and difficult experience. We have therefore partnered with a national law firm, Moray & Agnew, to offer a valuable support service for our insureds. An insured may seek up to two hours of free legal advice from Moray & Agnew concerning any matter related to the risk insured by the policy, (except in relation to any claims disputes or claims against ACE itself) provided that: a) The legal advice is sought during the policy period; and b) The insured must provide Moray & Agnew with the details of the policy number and policy period; and c) The legal advice is limited to one hour in relation to any particular matter up to a maximum of two hours per policy period. Moray & Agnew is unable to accept notifications of claims or facts that might give rise to a claim against the insured on behalf of ACE. The insured should follow ACE s claims notification procedures outlined in the policy to notify ACE of any claims and/or facts that might give rise to a claim. Phone the Moray & Agnew team on

8 CONTACT US ACE Insurance Limited ABN AFSL: Management Liability submissions: Australia Head Office and New South Wales Branch The ACE Building 28 O Connell Street Sydney NSW 2000 Tel: (02) Fax: (02) Queensland Branch Level 27, 10 Eagle Street Brisbane QLD 4000 Tel: (07) Fax: (07) South Australia Branch Level 7, 147 Pirie Street Adelaide SA 5000 Tel: (08) Fax: (08) Victoria Branch Level 16, 600 Bourke Street Melbourne VIC 3000 Tel: (03) Fax: (03) Western Australia Branch Level 26, 44 St George s Terrace Perth WA 6000 Tel: (08) Fax: (08) Important Notes This brochure is intended to provide only a general description of the insurance policy (ACE Elite II Plus Management Liability ed 02-13) and is not intended to modify the actual provisions of the wording. The Claims Examples given above are illustrative, and by way of example only and should not be taken as an indication of how a particular claim will be assessed by ACE. ACE does not represent that any future matter will be covered by the policy. Cover for a particular claim is determined by all the terms, exclusions and conditions of the policy depending on the specific facts assessed at that time. Any advice in this brochure is general only. Before acting on this advice, please consider your objectives, financial situation or needs. This brochure is intended to provide only a general description of the products and associated services offered by ACE Insurance Limited (ABN ). We recommend that a potential purchaser thoroughly examine any of our policy offerings and consult with an appropriate expert to be certain of the precise nature of its details. Potential purchasers should contact ACE or their broker and / or insurance agent for further advice ACE Group. Coverages underwritten by one or more companies of the ACE Group. Not all coverages available in all jurisdictions. ACE, ACE logo, and ACE insured are trademarks of ACE Limited. 03/