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Market Update
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D&O - International
Printable Version
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Does my current Directors and Officers policy cover
me and my company against potential legal actions
following the implementation of the Corporate
Manslaughter and Homicide Act 2007 that passed into
law on April 6?
The introduction into law of the Corporate Manslaughter and Corporate
Homicide Act 2007, which passed on April 6, 2008, will force senior executives
to take a fresh look at their approach to risk management and their firms’
exposures to Director & Officers (D&O) lawsuits.
Although the legislation has been watered down to exempt directors or
individuals under the new law, their own acts or omissions will be subject to
unparalleled scrutiny. So what are the implications of the Act, and what should
directors do to protect their business?
The Act puts the law of corporate manslaughter onto a new footing, setting out
a new statutory offence. It addresses a key defect in the law that meant that,
prior to the new offence, organizations could only be convicted of manslaughter
(or culpable homicide in Scotland) if a "directing mind" at the top of the
company (such as a director) was also personally liable.
The Act states: "The new offence allows an organization’s liability to be
assessed on a wider basis, providing a more effective means of accountability for very serious management failings across the
organization."
The new penalties outlined in the Act are financially severe, potentially with no upper limit in some circumstances.
In light of the above, it is clear that the "directing minds" need to have access to appropriate protection, to ensure that they
are represented correctly, regardless of whether they work for a small or large corporation.
The D&O Liability insurance policy can offer such protection; however, there are many variations of the product available and
it is important that cover, in respect of manslaughter, is not excluded.
It is therefore critical that you have your broker confirm to you what cover, assuming you have a Directors and Officers policy,
is provided by the policy.
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Please contact your Lockton Representative for further information regarding any information contained in this
market update.
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