Singapore is an economic powerhouse because it attracts so many businesses in the IT sector. Many companies establish branches in Singapore and like any company, it needs to have a proper corporate structure. This means that directors and officers need to be appointed. While all organizations strive to appoint competent individuals in high positions, unpredictable events that could harm a company can happen. It makes sense to get directors and officers insurance in Singapore to protect companies against certain liabilities. As we will point out below, these insurances play an important role and can ensure that a company does not collapse due to mistakes that can be made by higher management.
Different Types of Liabilities
High profile roles or people in high positions always have a decisional power that can sometimes backfire. Such decisions can include things such as:
– Wrongful dismissal or letting go of certain employees without abiding by workplace legislation
– HR-related issues with regards to behavior or interaction with existing or past employees
– Negligence or failing to fulfill their duties
– Misappropriation of company funds
– Mismanagement of corporate funds and finances
– Intellectual property theft
In all the above cases, if one such event occurs within an organization, the individual or the organization will be liable. They can have devastating effects on the financial health of a company and it can also affect their brand image and customer perception. A directors and officers insurance in Singapore offers a certain degree of protection. More and more companies opt-in for such types of insurances since it protects the company and its investors. At the same time, it protects the directors and officers.
How Insurance Can Save a Company
In all the previously mentioned cases that can cause some form of prejudice to a company, costs may be involved. For example, an employee may sue the company if they are mistreated and demand compensation. Another example can be the involvement of government officials when company funds are misused and fines may be involved. In such cases, the company or the directors and officers will be liable and the costs will need to be covered. To avoid having the company cover these liabilities and spend funds on fines and settlements, insurance can take on this responsibility. The fines and settlements can have a meaningful impact on the financial health of a company. In some cases, it may even cause the company to close its doors.
Which Companies Should Consider Getting Insurance?
Not all companies pay for insurance. Some may not need insurance against liabilities while others may be more exposed to the above-said situations. Depending on the scale of the operations of a company, they may choose to get or skip directors and officers insurance in Singapore. For example, not all large companies and corporations pay for such insurances. However, small and medium-sized companies tend to feel safer if they are protected against liabilities. The reason why large corporations do not always get insurance is that they have to pay a very large premium. At the same time, they may be profitable enough to cover eventual financial losses in the event of liability and they usually have in-house lawyers that can deal with unpleasant situations. Small companies may not afford to pay for the legal fees and settlements which is why such insurance is preferable.