Amwins Global Risks is proud to offer Management Liability (ML) policies arranged by Cquence. They're written in plain English, with simple terminology and far fewer pages than a typical ML policy wording, while being one of the most comprehensive coverages in the market.
We’ve prepared below some examples of when an ML policy would come into force, and how having a comprehensive policy like Cquence’s would be beneficial. We’ve also included in brackets which pillar of the policy/ies the claim would fall under. You can see Cquence's risk appetite here.
In the event of insolvency, a liquidator or administrator will typically examine your company’s transactions over the past three years and report on the conduct of directors who served during that period. Claims against individual director(s) may result if the insolvency practitioner believes any transaction represents inappropriate behaviour or wrongdoing, regardless of whether or not the individual received any personal benefit from the transaction(s) in question. Any past transactions can become the subject of allegations of financial mismanagement when creditors risk going unpaid, even if, at the time they appeared innocent and well-meaning.
If directors have been repaid some or all of any debts owed by the company to them, they may be accused of breaching their personal duties to the company on the grounds of preferential treatment to the detriment of other creditors (including HMRC).
Insured vs insured (ML)
It is very common for the board of directors in private companies to be shareholders. In many cases, they have close personal ties through marriage or long-term friendships. Unfortunately, even the closest of relationships can turn sour and lead to D&O claims. For example, should a director agree to sell their share in the business to the other(s), those selling their shares may accuse the other party of misrepresenting the true financial position of the company in their financial reports, in order to avoid paying a fair price for their shares.
Mergers, acquisitions and management buy-outs can lead to disputes and claims against both directors and companies for breaching the terms of agreements they committed to when completing such transactions.
Dismissal (Employment Practices Liability)
Even with adequate grounds to dismiss an employee, you must demonstrate that you acted properly and treated your employee fairly. Failure to do so may mean facing a tribunal. Furthermore, you could still incur significant defence costs proving that you acted properly and followed the correct process.
Allegations of unfair selection for redundancy are a common cause of employment claims. The company could be accused of failing to follow a fair procedure and/or discrimination e.g. a selection based on attributes such as age, gender or ethnicity.
Regulatory claims (Pension Trustee Liability)
The Pensions Regulator can investigate and bring actions against trustees and employers, if, for example, they believe that trustees have acted outside their authority as defined by the scheme rules, or if they think trustees are failing to carry out their duties with sufficient care.
If a defined benefit plan is not adequately funded, the Pensions Regulator can investigate and take action against trustees if they do not believe the trustees have been assertive enough when negotiating funding plans with the sponsoring employer.
The regulator can also carry out investigations and take enforcement action if they believe an employer is failing to meet their obligations with regards to the automatic enrolment requirements.
Employee Crime (Crime)
There are many ways in which corrupt employees steal from their employer’s inventory or other tangible property belonging to their employer.
Financial crime is also a risk. Examples include using false invoices to fictitious suppliers, or creation of a fictitious employee records in order to pay false salaries.
Data Breach (Cyber Breach)
If your systems are hacked by a third party, giving them access to personal, sensitive information such as customer addresses or payment information, you would have to establish the extent of their access, and notify the Data Commissioner and the data subjects of the breach.
An employee may lose a laptop or other hardware containing personal information, which could then be accessed by third parties. Again, the extent of any breach would have to be established and if necessary, the data subjects and the Data Commissioner notified.
Third parties may steal your clients’ or employees' personal data in order to sell it on, again requiring you to advise the individuals and the Data Commissioner.
ML insurance protects your clients against the types of risks mentioned above, and more. Get in touch with us today to find out how Cquence’s facility can help you.