The International Transport Intermediaries Club (ITIC) has warned that shipping companies should be checking their Directors & Officers (D&O) insurance cover in the light of their continued and increased exposure in the current difficult financial climate to liability claims from a variety of interests, including shareholders, employees, regulatory authorities and associated companies.
ITIC has cited a number of recent instances which illustrate the value of D&O cover, including a case in which a shipmanagement company and its entire board of directors, individually, received a claim from shareholders alleging that one or more of the directors were in breach of their duty to act in the best interests of the company in failing to ensure that the company had a reasonably comprehensive liability insurance programme in place to protect its assets.
With two incidents also reported the year before involving sizeable company oversights, and where claims resulted in significant losses on the balance sheet of shipmanagement companies, ITIC has warned that the continued economic downturn could place companies within the industry at risk if sufficient D&O cover is not implemented.
ITIC Communications Director Adam Jacobson said: “Such claims from shareholders often follow in the wake of a poorer-than-expected financial performance by the company. Those in the shipping industry without D&O cover will be especially exposed to liability if they do not have proper insurance protection.”