Owning and running a business carries with it significant responsibility and risk. Wrongful acts by business owners, dishonest acts by employees, harassment, wrongful dismissal and statutory fines and penalties are just a few areas of exposure that could threaten your business.
Management Liability insurance is designed to protect you, your business and your personal assets.
Management Liability Insurance is a cover we highly recommend for all businesses.
Management Liability policies have been designed to protect your company and its key individuals against the multitude of complex risks associated with operating a business. Management Liability Insurance is an innovative method of amalgamating traditional stand-alone covers such as Crime Protection, Directors and Officers Liability, Cyber and Privacy Liability, Entity Cover, Employment Practices Liability, Statutory Liability and Supplementary Legal Expenses and Tax Audit.
More specifically, a Management Liability Policy typically includes cover for:
- Wrongful acts by Directors and Officers
According to COAG Reform Council, there are over 700 Commonwealth, State and Territory Laws imposing personal liability on the 2.1 million company directors in Australia. This is further evidence of an increase in red tape and regulation for industry, corresponding to a greater number of personal exposures that company directors must contend with. - Dishonest acts by employees
Dishonest acts may include embezzling money or products from the company. The ever present impact on society of gambling and drug addictions is just one factor contributing to the high prevalence of fraud.
A recent KPMG report indicated that the known annual fraud bill in Australia is upwards of $250 million. Of this amount, 43% is never recovered, 49% is partially recovered and only 8% is fully recovered. 60% of frauds take over 3 years to be recognised. - Claims made by employees resulting from employment practices – Harassment, Bullying, Wrongful Dismissal etc.
Over 59% of Management Liability claims are related to employment practices. Currently, under the Fair Work Act, there are some 17,000 unfair dismissal claims per year processed, with the average cost of each claims in excess of $50,000. - Statutory fines and penalties
The most common form of claim under the Statutory Liability coverage relates to Occupational Health and Safety (OH&S) prosecutions. There are thousands of complex Commonwealth, State and Territory Acts relating to a broad variety of industries that could affect you. The Privacy Act Amendments (March 2014) and new Anti-bullying legislation are just two which can result in even further exposures for management. - Tax Audit Costs
The increase in the number of audits being conducted by the Australian Taxation Office, and the State Revenue Office is significant. A Management Liability policy will typically extend to cover the often substantial associated costs to your company.
Why do you need Management Liability Insurance?
- Over the last 10 years, industry statistics tell us that the frequency and severity of claims of this nature has more than doubled – $25,370 is the cost of the average claim (Dual)
- The global economy is exposing companies to multiple legal jurisdictions.
- Management Liability can help shield your personal assets from losses should costly legal action be brought against you or your business
To find out more about Management Liability Insurance and the implications for your business, please contact us on 1300 424 627 or info@whitbread.com.au.
This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.
