Changes in law prompt modifications
Markel has today re-launched its directors’ and officers’ policy to reflect a heightened risk exposure for directors of UK companies.
Legal changes, most notably from the Companies Act 2006, which came into force on 1st October, have prompted 20 modifications in the policy wording.
Directors have a new duty to promote the success of a company, which Markel said could put them at risk of an allegation of wrongdoing.
Markel also said that legislation due to come into force in April 2008 will further heighten the potential for high value claims against directors. This legislation will enable auditors to limit their liability to the company, which in turn may cause third parties to seek claims against directors instead.
Francesca Bristo, Head of Directors' and Officers' Liability at Markel International, said: “The new Act introduces a number of changes including a new statutory right for a shareholder to bring a derivative claim against a director in a broader set of circumstances than was previously permitted. There is no doubt that we expect to see a rise in the number of claims made against directors as a result of this and other changes.”
Highlights of the new policy include: the proposal does not form the basis of the contract; innocent non-disclosure will not void the policy; deletion of the hammer clause; unlimited automatic acquisition cover for subsidiaries (outside USA); and additional limit for non-executive directors.
