This section responds to claims made against the directors, officers and employees for Wrongful Acts, where they are not entitled to an indemnity from the company, so you do not individually have to fund your defence and settlement.
This section responds to claims where the company is entitled to give an indemnity to the directors, officers and employees for their Wrongful Acts. Having given the indemnity to the directors, officers and employees, the company looks to this part of the policy for reimbursement for the amount of the indemnity given to ensure that the company’s balance sheet is not impacted.
In addition to protecting your company from loss of money, securities, inventory or other property resulting from fraud events perpetrated by employees or third parties, Crime Insurance policies can be extended to provide protection from loss arising from paying a “fake invoice”.
Cyber security (data breaches) continues to be a main topic of discussion for directors and officers due to high profile incidents overseas (Wanna Cry, Equifax, Reddit, Under Armour/MyFitnessPal) but there should also be the awareness of multiple ransomware cases in New Zealand and Australia. Ransomware is a type of malware which restricts access to the computer system that it infects, and demands a ransom paid to the creator(s) of the malware in order for the restriction to be removed. This type of security breach interrupts the running of their business and can cause loss to the company and its shareholders.
Whilst New Zealand does not yet have the regulatory oversight which exists in the United States, Australia, United Kingdom and other countries, New Zealand directors and officers need to ensure that cyber security is included in their risk registry and the appropriate processes and procedures are put in place to ensure that they have a defence to any claims brought against them by shareholders or other parties.
Health & Safety at Work Act 2015 came into effect on 4 April 2016 and creates a due diligence duty so that those in governance roles (directors and officers) must proactively manage workplace health and safety. Directors and officers will be required to exercise due diligence to ensure that the PCBU complies with its duties. Failure to comply with a due diligence duty could result in prosecution and a fine, the maximum level of which would be determined by whether or not the officer’s failure exposed a person to a risk of death or serious injury or illness.
Due to the implications of the Steigrad Ruling 2013, Aon has reviewed and negotiated policy amendments to ensure that your Insurer can advance defence costs in the event that a section 9 charge under the Law Reform Act has been applied to your policy.