Are you considering an IPO? You may be forgetting one crucial factor: insurance.
Initial Public Offerings (IPOs) can be exciting ventures that help significantly scale companies to new heights. Although this may be true, many outside observers of IPOs (or even business people undergoing an IPO for the first time) may fail to recognise the significant risks involved with going public.
Errors in an IPO’s roadshow prospectus, failure to meet financial projections and mismanagement are just some events that could cause severe financial consequences not only to your company, but also your personal assets. To safeguard against these risks, it’s natural (and even mandatory) for companies to invest in D&O Insurance, IPO Insurance and Professional Indemnity Insurance.
What companies don’t realise is in this process is that investing in any cookie cutter policy may be harmful for them in the long run. Firstly, they may be paying unnecessary fees - especially in an environment of rising insurance premiums. Secondly, simple mistakes in policy wordings or a lapse in insurance renewals without the consultation of a qualified and experienced business insurance broker can lead to the rapid demise of a business. This may sound dramatic, but the recent events with Greensill Capital highlight how tangible this reality is.
Having a licensed business insurance broker and risk adviser on your team can help your company stay on top of your insurances while helping you keep premiums low. Their role is to see the long term objectives of your company and help safeguard its prosperity accordingly. Using their extensive supplier networks, they will be able to help you place tailored insurance solutions that are difficult or impossible to find easily.
When looking for a business insurance broker (in Australia), it is useful to look for a business insurance broker with an Australian Financial Services (AFS) license. Such brokers are regularly audited to ensure that they provide a high level of service and advisory.
Business insurance brokers are important for any size of business, not just publicly listed entities. For example, a business insurance broker can help mining contractors place hard to find or innovative Mining Contractors Insurance solutions to help protect their assets while allowing them to comply with the requirements of their mining company clients. Cyber Insurance is also crucial for companies with any level of cyber activity. The complexity and ever-changing nature of technology requires advisory from experienced insurance professionals who are up-to-date with cyber protection. D&O Insurance, or Directors & Officers Insurance, protects you and your company’s leadership team, as well as their private assets, from claims that could occur as a result of decisions made during their duties.
Typically, a D&O Insurance policy can contain three agreements: Side A, Side B and Side C. Side A can be used to protect Directors Liability for liabilities and legal defence that results from wrongful acts in their role. Side B can help with the Company Reimbursements of Directors Liability where the company could be liable to indemnify directors such as under a Deed of Indemnity. Side C is utilised for claims arising from public trading of securities such as securities market conduct breaches.
Business Insurance can be crucial for any size of business. This being said, businesses need to understand the complexity of insurance, invest in the right policies and be ahead of their renewals. This is where having the right business insurance broker on your team will be advantageous.
Important Disclaimer – This article provides information rather than financial product or other advice. The content of this article, including any information contained on it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.
