9.3 Director's and Officer's Liability Insurance

The law imposes duties upon directors and officers of companies for which they are personally liable including:

• to exercise a reasonable degree of care and diligence in the conduct of their duties and the use of the power of their position
• to not make improper use of information or their position to gain advantage or to disadvantage others
• to act honestly in all of their dealings
• to prevent the company from trading and continuing to incur liabilities whilst insolvent.

Directors and officers may be liable for wrongful acts, breaches of trust or where the entity does not meet its legal responsibilities and can be sued by employees, creditors, clients and competitors.

Under the Corporations Act, an entity is legally able to indemnify its directors and officers other than in respect to claims:

• made by the entity or related body corporate
• involving a lack of good faith.

A director's and officer's liability insurance policy in the private insurance market usually has two insuring clauses. The first clause addresses coverage for the board members, directors and committee members individually and the second clause addresses company re-imbursement.

Directors and officers should seek professional advice regarding their insurance needs.

Queensland Government Insurance Fund (QGIF)

QGIF was established on 1 July 2001 to manage the State's insurable assets and liabilities. Whilst it is a self-insurance fund of the Queensland Government, QGIF operates on an insurance company model meaning that it collects premiums from which claims are paid and reserves are built up to meet the cost of future claims.

Participation in QGIF is restricted to State Government departments, for whom participation is compulsory, and to statutory bodies for whom participation is optional subject to approval by Queensland Treasury. GOCs are ineligible to participate in QGIF and most importantly, QGIF does not provide insurance cover to any other non-State Government entities.

More detail on the insurances available from QGIF can be obtained through their website.