Are you Gambling with more than you realise in Business.....

Monday, 17 December 2012    Accounting,Business Growth

Management Liability Insurance

Would your personal assets be protected if you were sued for something that happened in your business?
Every day businesses just like yours and ours are being faced with a situation where not only the business but the managing directors are being personally sued or fined for workplace incidences.
Even if the claim or allegation is baseless or without merit it can still cost thousands of dollars to successfully defend you or your company.

A Management Liability Policy covers the directors and officers of a company for claims such as:
  • Occupation Health and Safety proceedings
  • Allegations of unfair dismissal, bullying, discrimination or sexual harassment
  • Breach of directors and officers duties
  • Defamation
  • Tax Audit
  • Breach of Confidentiality
  • Breaches of Fair Work Act, Trade Practices Act or other legislation
  • Theft of money or stock by employees and others
  • Fines and penalties imposed by regulatory authorities.

Important Points to consider

15,000 unfair dismissal claims were bought against SME’s in 2011; the average cost  was $50,000 each.
Size does not determine a business’s risk exposure. A small company is penalised and asked to defend themselves in exactly the same manner as a large company.
  • Employee crime claims have increased by 600% in two years
  • Employment Practice claims have increased in cost by 350%
  • OH&S claims are up by 480%
  • A Management Liability claim can take up to two years to settle. That’s two years of costs accruing!
  • Defence costs outweigh fines in most instances.
  • Employment Practices Liability claims have been seen up to $2.8m in claim costs
  • 50% of  Management Liability notifications become a claim.

Real Example:

A company’s former accounts manager was responsible for making payments to tax authorities. He had cheque signing authority for, as well as access to, the company’s payroll account. During his employment, he set up a phantom firm that allegedly provided tax services to the company. The loss wasn’t discovered until after the employee had left the company and was caught doing the same thing to his next employer, at which time he admitted that he had established the phantom company for the sole purpose of stealing from his employer.
A thorough investigation determined that the account manager had taken nearly $600,000.00. The company chose not to press for the prosecution of the former employee as he had gambled away all the money. The investigation costs were $28,000.00.
For an obligation free quotation please contact Meg Roessler on megr@butlersca.com.au or call (07) 5536 2288 to discuss further.