Two-thirds of small and medium business leaders in the United Kingdom are not aware of what directors & officers insurance is, according to new research by Allianz Insurance, one of the largest general insurers in the UK and part of Allianz SE Group.
The poll of 1000 small and medium-sized enterprises (SMEs) and mid corporate businesses also revealed that more than half of business leaders (54 percent) said that they did not realize that a company director can be held personally and legally liable for a business decision.
Respondents believed the top three risks which face their business were data security (25 percent), credit risk (19 percent) and reputational risks (15 percent), the Allianz report revealed.
When asked specifically about reputational risks, those surveyed said that their biggest concerns were:
- A wrongful act by senior management or director (36 percent)
- Making a decision which loses money for a client’s business (32 percent)
- Employment practice claims against senior management or a director (27 percent).
“Despite the lack of awareness revealed by our research, small and medium businesses face the same risks as their larger peers and often, they have further challenges because they do not have an in-house legal team to help manage a claim or investigation against them,” said Stephanie Ogden, speciality lines underwriting account manager, Allianz Commercial.
“With an increasing focus on regulation and litigation in the UK, we believe that directors and officers insurance is a must for a business of any size,” she added. “It provides valuable access to specialist lawyers and consultants, providing companies and their senior executives with the peace of mind that they can make complex business decisions without the fear of financial and reputational consequences.”
Allianz Insurance has released a new white paper in partnership with international law firm, DAC Beachcroft, called “Tough at the Top – Protecting your Key People,” to explain the risks faced by company directors and the protection that a directors & officers policy can provide.
Caroline Cherry, associate, DAC Beachcroft, said: “Many directors don’t realize that if a fine is levied against them they can’t charge it back to their company and that it will be a personal liability. It is vital to understand the legislation that applies to them in their role as director, and the implications of claims being made against them.”
Source: Allianz Insurance
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