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Subscribe to our
bi-monthly
HPASA newsletter. |
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October 2011
REVISED
COMPANIES ACT AFFECTS BUSINESS LIABILITY
INSURANCE |
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| The introduction
of the revised Companies Act and the
advent of the King III Code on Corporate
Governance has necessitated that companies
review their insurance cover, specifically
with regard to Directors and Officers
insurance. |
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Accountability
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accountability serves to make the
general public aware of companies’
workings. It also serves to heighten
awareness for the rights of
recourse the public can take
against a business and its stewards
when a situation has not been conducted
in a responsible and ethical
manner. |
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Directors
and Officers (D&O) Insurance |
Because
of this heightened accountability,
the personal risks for business
owners and reputational risks for
the business itself are significant.
The good news for businesses and
their stewards is that these risks
can be lessened through |
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comprehensively structured business liability
insurance options, specifically Directors
and Officers insurance.
William Croxton of SATIB Insurance Brokers says,
“At its roots, D&O insurance
insures ‘behaviour’ in that
the decisions of directors and officers are the
matters that often lead to claims. That is, an
incorrect decision often leads to public and/or
shareholder discontent and, thus, a lawsuit
against the directors and officers who
made the decision. Even innocent errors in judgment
by executives will bring D&O insurance to
the forefront of the matter; especially because
most "D&O" claims are settled before
going to trial.” |
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Overview of D&O Insurance |
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It covers damage
or defence costs in the event of
a lawsuit against a company for alleged
wrongful acts by the directors or officers. |
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This business liability insurance
coverage can also extend to defence costs
arising from criminal and regulatory
investigations/trials. Often, civil
and criminal actions are brought against
directors/officers simultaneously. |
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Local D&O insurance encompasses
two predominant clauses, commonly known
as Side A and Side B: |
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Side A deals with the
personal liability of directors
and officers |
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Side B addresses a
company’s reimbursement where
the organisation has indemnified
the director or officer. |
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| For
Information on the
D&O product
please contact William
Croxton of SATIB
Insurance Brokers
on 0861 728 4248
or email wcroxton@satib.co.za |
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| OTHER
BUSINESS RELATED INSURANCE PRODUCTS |
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Buy &
Sell
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All businesses have
a unique set of financial
requirements which need to
be managed in times of crisis. Buy
& sell agreements can help as
they provide a legal document, which
ensures that the business is not thrown
into disarray if one of the stakeholders
dies or is permanently disabled. |
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Buy & sell agreements
preserve the continuity of
business ownership. They
are designed to protect the shareholding
of the partners or owners by providing
the remaining shareholders the funds
to purchase the shares of the deceased
or disabled partner. |
Key Person Policy
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A key person policy
is life cover that is taken
out by an employer to insure
the life of a key individual within
their organisation. |
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This key person would
be someone within the business who
significantly enhances profitability. |
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This cover ensures the
continuation of the business
should this key person pass away or
become permanently disabled. |
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It does this by
providing bridging finance
to replace that person without suffering
financial losses, absorbing business
disruptions, and funding the
recruitment and training of a suitable
replacement. |
Personal Liability
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Businesses incur debt
and shareholders generally
have to sign surety for these,
which creates certain business and
personal risks. |
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Personal liability
insurance provides cover
for any sureties that have been signed
by business stakeholders in the event
of their death or disability. |
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This cover also protects
the business and the estate from creditors
by settling the debt and allowing
the business to operate without
the burden of potentially catastrophic
debt. |
Personal Life & Disability
Cover
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As a responsible partner
and parent, it is important to be
prepared for every eventuality, even
death and disability. |
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Your family’s
standard of living could suffer in
the event of death, disability or
dread disease of one or both of the
breadwinners. |
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Personal Life and Disability
cover provide the funding needed to
continue supporting your family if
you are unable to work due to illness
or injury and it ensures that major
debt items such as home loans and
car repayments do not cripple them
financially. |
Retirement
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After a lifetime of
hard work, retirement should be about
enjoying a relaxing and well-deserved
break but it can become a distant
dream if the retirement funding that
has been put in place is insufficient
and basic needs cannot be met. |
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Retirement cover allows
for the investing of small amounts
on a monthly basis, accumulating the
required amount for the desired retirement
date. |
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| For
more information
on business liability
insurance and
other insurance
options, contact
Brett Lazarus of
SATIB Insurance
Brokers on 0861
728 4248 or
blazarus@satib.co.za |
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