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Crime
Background:
The Insured notified a claim under the Crime provisions of the Policy, seeking cover in respect of alleged losses resulting from the redirection of funds from the Insured’s business to an account held by an employee, resulting in a substantial loss. It was alleged that the former employee had altered company invoices to transfer funds to his own bank account.
Outcome:
There was sufficient information within the notification to trigger the Crime investigation cover under the Policy, and DUAL appointed a loss investigator/forensic accountant to work with the Insured to identify and verify the losses resulting from the dishonest conduct of the General Manager. The loss investigator was able to assist the Insured in substantiating losses of over $500,000, which were indemnified by DUAL.
Following the discovery of the alleged fraud, the Insured engaged a marketing consultant to develop a strategy to manage reputational damage and restore market confidence, and sought cover under the Crisis Containment provisions of the Policy. There were two phases to the work undertaken. Phase 1 was covered under the Policy, as it was a direct action to address reputational damage and the consequent impact on the Insured’s income. Phase 2 related to a rebranding initiative and was not covered under the Policy.
EPL
Background:
The Insured’s business required employees to deliver and collect various items. The Insured received a number of complaints from members of the public regarding the dangerous driving of one of its employees. The Insured warned the employee of the initial complaints and took steps to provide further training. However, the Insured continued to receive complaints regarding the employee’s driving, as well as fines relating to the conduct. Following receipt of footage of the employee’s driving, the Insured dismissed the employee. The employee subsequently filed an unfair dismissal application with the Fair Work Commission. DUAL indemnified the Insured for the claim under the Employment Practices Breach provision of the Policy and appointed panel counsel to assist the Insured in responding to the application.
Outcome:
The Insured successfully defended the application, with the Commission confirming that the dismissal was not harsh, unjust or unreasonable. While this was a successful outcome, costs were not awarded in this jurisdiction. As such, defence costs in excess of the deductible were covered under the Policy.
Workplace fatality – WHS investigation:
Background:
The Insured received a number of notices from SafeWork in respect of the fatality of an employee who was caught in industrial machinery at the Insured’s premises.
Four employees of the Insured received notices to attend compulsory interviews with SafeWork. The Entity also received notices for the production of documents. DUAL appointed panel counsel to assist the Insured with the production of documents and to attend the SafeWork interviews to support the employees.
Outcome:
Indemnity was initially granted under the Occupational Health and Safety Defence Costs provision in respect of the investigation. In excess of $80,000 in investigation costs were paid under the Policy. The Insured was subsequently served with prosecution proceedings under the relevant SafeWork legislation, seeking a penalty for breach of the Act.
DUAL indemnified the Insured in respect of the defence costs of the prosecution and instructed panel counsel to assist the Insured with its response. Defence counsel worked closely with the Insured and SafeWork to negotiate an Agreed Statement of Facts, which presented the best possible scenario for the Insured in seeking to minimise any penalty awarded pursuant to the prosecution. The Insured was concerned that any conviction would jeopardise future contracts and, consequently, defence counsel are working with the Insured to seek resolution without a conviction.
DUAL indemnified over $600,000 in excess of the applicable excess under the Policy.
Director claim
Background:
Proceedings were filed in the Supreme Court by another director of the Company against two former Directors of the Insured, alleging oppression and unconscionable conduct while they were engaged as Directors of the Insured. The Claimant alleged that the former Directors directed contracts to companies in which they also held an interest. The Claimant sought compensation for the alleged losses incurred due to increased costs of contracted services. Indemnity was granted to the two former Directors (defendants to the proceedings) under clause 2.1 of the Policy, as the Company declined to indemnify the Directors.
Outcome:
Defence counsel were appointed for each Director due to potential conflicts of interest. The matter proceeded and, following a number of settlement attempts, was finally resolved by way of a non-pecuniary agreement between the parties. However, defence costs in excess of $400,000 were incurred and indemnified in order to bring the matter to finality.
Statutory Liability
Background:
Proceedings were initially commenced by the Australian Communications and Media Authority (ACMA) against an Insured, alleging various breaches of marketing and subscription regulations. ACMA initially investigated complaints received from consumers, following which it commenced proceedings against the Directors and the Insured Entity. DUAL engaged panel counsel at the outset to assist with the defence, and a number of attempts were made to reach a resolution with ACMA.
During negotiations, ACMA agreed to release the Directors from the proceedings. However, unfortunately, ACMA refused to resolve the matter with the Entity, and the matter proceeded to hearing. The Insured Entity, with the assistance of panel counsel, successfully defended the proceedings and received a costs order in its favour.
Outcome:
DUAL was able to recover approximately 60% of the defence costs incurred, which totalled in excess of $800,000. DUAL granted indemnity to the Insured and its Director in respect of defending ACMA’s claim pursuant to Additional Benefit 2.3 (Statutory Liability).
Any product information discussed in this blog is subject to the terms and conditions of the policy, eligibility criteria, any additional premium for optional cover, limitations and exclusions.
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The information contained in this blog is intended for licensed insurance brokers and other authorised intermediaries only. DUAL issues insurances on behalf of Certain Underwriters at Lloyd’s of London and/or Allianz Australia Insurance Limited, acting as their agent. The information is of a general nature and does not take into account the objectives, financial situation or needs of any person. It is intended for the use of professional intermediaries who are expected to consider whether it is appropriate for their clients. Before recommending or offering any insurance product, intermediaries should read the policy wording, relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) and assess whether the product is suitable for their client’s circumstances. These are available on request or via our website at DUAL Australia.