On the record
Callum Taylor, D&O Underwriter, spells out the risks facing employers – and how they can protect themselvesThe need for SMEs and their directors to have suitable protection from legal action brought against them has never been greater. As well as trying to develop their business in an increasingly complex economy, directors have to comply with a huge number of laws, including health and safety, trading standards, employment and the environment. The cost of successfully defending a regulatory prosecution can be substantial. Could your clients easily afford a £100,000 legal bill?
Recent regulation offering increased protection for employees has further increased the risks for even the smallest employer. It includes greater maternity and paternity rights and laws banning discrimination on the grounds of age, religion or sexual orientation. Companies are often not aware of their liability for their employees’ actions – even an ‘off the cuff’ remark made in jest can lead to legal action.
The new Corporate Manslaughter Act is also causing concern. When it is introduced at the end of this year, business owners will face the possibility of prosecution and an unlimited fine for management failure leading to the death of employees or third parties, should they be found guilty. Companies could also be prosecuted for breach of their duty of care in areas they may not have previously considered. An example of this could be a company failing to ensure its employees’ cars are in a roadworthy condition when being used in during their employment – even in cases when employees are using their own cars.
The good news is that your clients can cover themselves with suitable protection. Hiscox has developed the Management Liability Portfolio (MLP), a unique insurance offering for SMEs. It includes cover for directors’ and officers’ liability, employment practice liability and corporate legal liability – all via a one-cost policy. Cover under Hiscox MLP includes many areas not covered in standard D&O policies and could prevent your clients facing a hefty legal bill.
Cover is generally available via a pre-priced proposal form and on a continuous-cover basis, so clients don’t have to complete a proposal form and renew their policy every year. For more information, please contact your local Hiscox underwriter.