Investors put at risk by failure to insure key players
Major corporations could be guilty of neglecting their obligations to investors by failing to insure their key personnel adequately.
CSP chief executive, Lachlan St Clair, said there was a worrying tendency by the big end of town to ignore key person risk.
"We believe there are many big players in Australia neglecting their fiduciary duty to protect investors, and putting both shareholders and their own corporations at risk, because they have not put key person insurance in place," he said.
"Big companies — particularly those with public boards — have a responsibility to shareholders and if they're aware of risks and don't put the necessary measures in place to protect themselves against them, then their share prices will be affected if they lose a key player to death or disability.
"I'm not sure why the big end of town does not seem to have addressed key person risk, although it could have something to do with a perception that these types of policies require a lot of underwriting and are very time-consuming."
However, St Clair said such concerns were needless, noting that CSP had written a $60 million key person insurance policy for a global corporation entering the Australian market, within three weeks.
"We were able to complete everything required within the three-week timeframe, finalising the policy on a Friday and issuing it on the following Monday," he said.
"The quick turnaround proves that when all parties are committed to the same outcome, underwriting can take a matter of weeks, not months."
AUTHOR
Nicholas O'Donoghue
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
