Almost 25% of directors in New Zealand lack directors’ and officers’ (D&O) coverage as part of their remuneration packages, and insurers say premium costs are not to blame.

The Insurance Council of New Zealand (ICNZ) has expressed concern over the finding, which arises from a New Zealand Institute of Directors and EY survey.

“D&O insurance is of vital importance for directors,” ICNZ CEO Tim Grafton said. “Their responsibilities and accountabilities have grown substantially in the past few years and without D&O cover they may find themselves personally responsible for what goes wrong.”

It is thought the low penetration rate is exacerbated by charitable organisations and small businesses failing to realise the liabilities their directors face.

Institute of Directors CEO Kirsten Patterson says about 20% of the survey respondents are from non-profit organisations. Some will be volunteering, and may not consider D&O coverage important. 

“Of course, that’s not true – liability cover is important,” she told insuranceNEWS.com.au.

“We think it’s important that people on boards understand their potential liabilities and the need for D&O insurance.”

In Australia D&O premiums have spiked in recent years amid soaring numbers of class actions. But Mr Grafton told insuranceNEWS.com.au this has not occurred in New Zealand.

“We are not experiencing any significant increase in premiums in New Zealand. Premium is not a factor in one in four directors in New Zealand not having that cover.

“We tend to be less litigious in this country and class actions are far less common.”