At times, the management of an organization can make a fiduciary decision which can have an impact on the investors, customers, and employees of the organisation. Companies hold an ethical and legal relationship with the employees as well as the shareholders. When an individual accepts to act as a fiduciary, he becomes responsible on behalf of another party and is required to act in the best interest of the principal.
Listed Below are The Different Types of Businesses and Why They Need to Protect Their Staff For Their Decisions
1. Listed Companies
- Board of Directors & Management of listed firms are bound by complicated web of regulations, and must follow utmost care in the decisions made by them.
- Especially when it comes to disclosure norms the management of these firms, must be careful not to reveal information affecting share prices privately, without confirmation or in public prior to clearance.
- The management and directors can be sued by investors or other stakeholders for their decisions even after years of the decision.
- A D&O Insurance will help in bearing the legal expenses and paying the legible compensation to the suffering party and protects the staff from losing their life savings in such scenarios.
2. Financial Consultants
- Financial consultants are in a fiduciary relationship with their employers. The business has a high-risk profile, and several factors can jeopardize an advisor-client relationship which often leads to a lawsuit.
- Employees of many Financial consulting firms advise their clients about the investments, mergers and divestments and often required to serve on the board of new entities.
- Several variable aspects affect their decisions, and at times different stakeholders may raise question on the viability of a decision (even when taken several years ago).
- In the case of a lawsuit, the directors and officers can be protected from the adverse financial impact with Directors and Officers Liability Insurance.
- A D&O Insurance will bear the legal advisory expenses and compensation in case the suiter is affected and needs to be resuscitate.
3. Trustees of Mutual Funds
- Mutual funds are a form of an investment wherein the client invests a certain sum of money. The managers of these mutual funds invest the client’s money in different areas to maximize the earnings for the client.
- The mutual funds often need to follow an investment philosophy and are bound by complicated regulations. In such case, an investor can raise the issue of the fund not following through the conditions mentioned in the offer document.
- Such allegations may damage the reputation of trustees whose sole duty is to protect investors’ interest.
- The trustees are in a fiduciary relationship with the clients, and they require protection from damages in the form of a D&O insurance.
4. Civil Engineering Firms
- Civil engineering firms provide guidance and help in the construction of buildings and roads. The civil engineering firms have various employees who face various risks for working in hazardous conditions.
- An injury or accident to an employee could put the Civil Engineering Firm in trouble. To protect the management, a D&O Insurance is an ideal buy.
- The design factors and safety of users of the infrastructure built by the firm can also come under question.
- The firm would have to fight the allegations in court even if the best decisions had been made by the management of the company.
5. Fund Management Companies
- Fund management companies are somewhat like financial consultants. They collect money from several investors with common objective and try to maximize the return.
- Fund management companies need to protect their employees for investment decisions made on behalf of the investors in fiduciary capacity.
- Investments are not always behave in a predictable way, and, however the investors are generally aware of this, they may feel that the AMC has not followed the defined process.
- In the event of a lawsuit, a D&O Insurance can safeguard the interests of the fund manager and other responsible staff.
Director and Officers Liability Insurance (D&O Policy)
Director and Officers Liability insurance (also known as “D&O”) is a type of liability insurance payable to directors and officers of a company or to the management of an organization as reimbursement for losses in an event where the insured suffers a loss resulting from an alleged wrongful act committed in their capacity.
How to Buy?
The management staff of a company can decide to purchase a Director and Officers’ Liability Insurance. The rate of the premium is determined as per the size of the company, the profile of the director, the sum insured and the nature of business.
D&O policy can be bought in minutes through the award-winning online portal of SecureNow. SecureNow is one of the leading and trusted corporate insurance advisor with solutions to provide, manage and claim application experience for various general and life policies.
