News Corp claim under their Directors and Officers Policy

On Monday 22nd April 2013, News Corporation advised that it had recovered $139 million in insurance proceeds in a settlement with shareholders over the board of directors’ actions related to the company’s phone hacking scandal and its acquisition of Shine studios.

The company said the money would come from insurance policies held by members of the board who were the defendants in the suits.

While this matter did not directly affect Australian insurers it is a reminder that around 24% of large organisations in Australia have had need to call upon their Directors and Officers (“D&O”) Insurance program. On my best estimates, only around 17% of all SME businesses in Australia have any form of D&O cover.

Shareholders, employees, and other exposures from regulators, are just some of the risks that can be protected by a good D&O policy.

This is certainly an area that both business owners and their brokers should be discussing. The risks are real and as the director and officers can be personally liable, they should be treated as personal risk not a business risk.