IT is a good reminder to remember that serving on a board is not just an honour or public duty, it’s a serious legal responsibility.
Everyone considering serving on a board must be reminded that when directors fall short of their fiduciary obligations, they can be held personally liable for the decisions taken on that board, sometimes with devastating financial consequences.
As an insurance professional, I have spent years advising clients across the public and private sectors on risk management. And one of the most critically underutilised protections in Trinidad and Tobago is Directors and Officers (D&O) Liability Insurance.
D&O insurance protects board members and senior executives against personal losses if they are sued for decisions made in their official capacities. This includes:
• Legal fees
• Court-awarded damages
• Settlement costs
• Regulatory investigations
Even in cases where the director acted in good faith, the cost of defending oneself in court can run into the hundreds of thousands of dollars. Without D&O insurance, those costs come out of the individual’s own pocket.
This has now became essential in today’s governance climate. In today’s environment of increased transparency, oversight, and litigation, the risk to directors has never been higher. Public expectations are rising. Regulators are more vigilant and whistleblowers and auditors are doing their jobs. That means directors, and those serving voluntarily on state boards, cannot afford to be unprotected.
What’s worse, many individuals accept board appointments without even asking whether D&O coverage is in place. That needs to change. Before accepting any directorship, the first question a prudent individual should ask is: “Do you have active D&O liability insurance?”
A risk management consultant or insurance broker is imperative to have. For state enterprises and ministries, D&O coverage isn’t just about protecting individuals, it’s about attracting qualified, responsible professionals who are willing to serve. No one should be expected to take on fiduciary responsibilities without the tools to manage that risk.
And for private companies, having an adequate D&O policy is now a best-practice standard for good corporate governance.
All members of the public who are considering serving in a board should ensure the company has a proper insurance Broker and also ensure all insurances are in place, one in particular the D&O cover. It is no longer acceptable to operate without proper coverage in these times. Directors and officers must be protected, not from accountability, but from financial ruin stemming from honest mistakes or legal grey areas.
As an insurance broker previously, I strongly urge every board, state or private, to review your current coverage immediately, ensure it is up-to-date, and educate your directors on what protections are in place. It’s not just smart policy, it’s the responsible thing to do and may protect you from financial ruin.
Neil Gosine is the MP for Chaguanas West and Parliamentary Secretary in the Ministry of Trade, Investment and Tourism. He is an insurance executive, holds a Doctorate in Business Administration, a Master’s in Business Administration, a BSc in Mathematics and a BA in Administrative Studies. The views and comments expressed in this column are not necessarily those of AZP News, a Division of Complete Image Limited.
