Australia's larger corporations are "neglecting" their fiduciary duty to hold key person insurance, which is putting shareholders and the company at risk, argues a Sydney-based advice practice.
CSP chief executive Lachlan St Clair said there is a "worrying tendency" among the big end of town to “ignore” the need for key person risk insurance.
“We believe there are many big players in Australia neglecting their fiduciary duty to protect investors and [they are] putting both shareholders and their own corporations at risk because they have not put key person insurance in place,” Mr St Clair said.
“I’m not too 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."
Mr St Clair’s comments come following his writing of a $60 million policy for a global corporation that was looking to enter the Australian market.
If a corporation’s management team is completely aware of its key person risk needs and is fully committed to putting the insurance in place, policies can be written quite quickly, Mr St Clair said.
“Although we cannot disclose which corporation we helped, we can say that because they very much wanted it to happen, we made it happen within three weeks,” he said.
“We were able to complete everything required – financials and medicals – within the three-week timeframe, finalising a policy on a Friday and issuing it on the following Monday.
“The quick turnaround proves that when all parties – the management team, the financial planning team and the insurer – are committed to the same outcome, underwriting can take a matter of weeks, not months,” he said.
Mr St Clair added that the policy was written with ANZ’s OnePath.