Today's businesses are becoming more exposed to financial risks than ever, as the UK becomes increasingly litigious.

An ever growing and complex legal system, political changes imposing new responsibilities on companies, together with a more financially aware general public has created a treacherous environment for many industries.

Financial Risks Insurance includes many different types of policies, although is predominantly concerned with three areas:

    * Professional Indemnity Insurance
    * Directors and Officers Insurance
    * Employment Practices Liability Insurance

PROFESSIONAL INDEMNITY INSURANCE

This type of cover is designed for those occupations involving offering advice for a fee. These trades are often purely financial in nature, such as accountants, solicitors, insurance brokers and financial advisors etc.

If any of these types of firms were to offer poor advice, the customer would be entitled to sue for any financial loss that they subsequently incurred.

In recent times however, an increasing number of industries are finding it necessary to carry a professional indemnity insurance. Training consultants, media and design companies, computer consultants, architects, surveyors and many others are all vulnerable in the 'blame and claim' culture.

DIRECTORS AND OFFICERS INSURANCE

Directors' duties are defined in a wide variety of statues, regulations and obscure case law. Invariably, many directors are unaware of what their full duties are. Unfortunately in law, ignorance is no defence. Consequently a director that fails in any of his duties can find themselves personally liable to the business, its shareholders, investors, creditors and the general public. In some cases they may even face criminal sanctions..

Common law requires Directors to carry out their duties with 'the care an ordinary man would take in the same circumstances on his own behalf' and with the skill one would expect from someone of his 'particular knowledge and experience'. Even when delegating work to staff, they must ensure that the person is capable, honest and reliable enough to perform the task.

Often a director may come across conflicts between the companies' and their own personal interest. The companies' interest must always take precedence. Not only this, but a director has a positive duty to promote and protect the interests of the company. Failure to do so, may invite actions from any party that has suffered financially as a result.

EMPLOYMENT PRACTICES LIABILITY INSURANCE

Companies large and small are seeing an increasing responsibility to their employees. Legislation is constantly changing with wide ranging effects, from greater requirements for flexibility from the employer, through to additional rights for parents.

Whilst some companies may have a human resources department, smaller companies find more of their time is being taken away from their business activities to ensure they comply with regulations. This creates an environment where even the most caring employer may fall short and become subject to legal action from a disgruntled employee. Employment disputes are becoming more frequent and more costly providing one of the fastest growing areas of corporate liability.

In the UK, the Employment Relations Act 1999 has considerably extended the rights of the employee against his or her employer. The publicity surrounding the implementation of the Act has clearly increased employees’ awareness of their rights and increased the expectations they have of their employers. UK Legislation Examples of statutes that impose duties upon Employers include:
Sex Discrimination Act 1975     Human Rights Act 1998
Working Time Regulations 1998     Part Time Workers Regulations 2000
Race Relations Act 1976     Employment Relations Act 1999
Equal Pay Act 1970     Disability Discrimination Act 1995