Insurance against professional liability in function of protection of the interests and stability of the company business and the managers

Authors

  • Мирослав Мишкић Jahorina Insurance VIG ad.
  • Биљана Јоргић Jahorina Insurance VIG ad.

DOI:

https://doi.org/10.7251/ACE1421085M

Keywords:

general liability, professional liability, directors and officer liability insurance, D&O

Abstract

On the markets of developed countries, insurance against general and professional liability presents the foundation in protection of stability of the company business. There are various lines of these products which as their goal have the coverage of civil-legal liability for damages in case of death, bodily injuries or health, as well as in case destruction of property of third parties. Insurance companies have, depending on the needs of the market, developed products intended for specific professional segments. Therefore, all countries are introducing certain forms of professional liability as mandatory according to the law. Main goal of the mandatory obligation is exactly the protection and stability of the company, because the amounts of claims, if they incur, can certainly lead to endangering of the company liquidity. Insurance against general liability covers liability for damages if they are caused by business activities or by possession of property, by legal relations or from capacity as the source of danger, which are designated in the document on concluded contract, i.e. in the Insurance conditions of the insurance company.

Professional liability from business activities has a goal to provide insurance protection against claims which can be fled against the companies, or the service purchaser, and which incur as a consequence of professional mistake of the insured in performance of registered activities and for which the company is liable according to the law.

One of form of liability insurances which has recently captured the attention of the public is insurance against liability o directors and officers (D&?). Tis insurance instrument is financial protection for for members of the management, managers, members of Supervisory boards and other officers in a company during management, and even after that (so called delayed e?ect). Global experience and competence – in modern business world many companies operate globally. Being informed about the cultural and political diversity, and the requirements and conditions on global market, helps the insured to recognize the personal exposure, and to find the appropriate insurance coverage. International insurance groups help with this by o?ering their clients international experience
and knowledge.

Due to the stated facts, the modern world where insurance is a matter of culture and prestige, providing the liability policies from renowned insurance companies, reaching the level where Master programs for companies owned in other countries are being bought which provide high limits and wide coverage on basis of insurance volume, is providing very important and powerful element and standard of corporate governance. Tis primarily protects the reputation rating of the companies themselves, which can be jeopardized with fling of lawsuits and litigation.

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References

Anderson A., Edelman, D.& Nicholson, A. (2010). Analysis of the scandal of Enron. Преузето 1.4.2014. са: http://en.wikipedia.org/wiki/Enron_scandal

Bailey, D.& Knepper, W. (2009). Liability of Corporate Officers and Directors. 8th edit. New York: Lexis, Nexis.

Vienna International Underwriters.(2014). Third part liability. Vienna: Underwriters.

Јахорина осигурање Vienna Insurance group ад Пале. (2010). Посебни услови за осигурање професионалне одговорности ревизора и ревизорских друштава. Пале: Јахорина осигурање Vienna Insurance group ад.

Мишкић, М. (2014). Д&О осигурање менаџера и чланова управе као важан елемент корпоративног управљања. У IX међународни симпозиј о корпоративном управљању (стр. 343-361). Бања Врућица: Финрар.

ОЕCD. (2004). OECD Principles of Corporate Governance. Преузето 1.4.2014. са http://ec.europa.eu/consumers/archive/safety/prod_legis/index_en.htm

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Published

2014-07-31

How to Cite

Мишкић, М., & Јоргић, Б. (2014). Insurance against professional liability in function of protection of the interests and stability of the company business and the managers. Acta Economica, 12(21), 85–101. https://doi.org/10.7251/ACE1421085M

Issue

Section

Review article