02 9925 0522 mail@csp.com.au

LachlanStClairI believe that there are many businesses in Australia, from the small start-up through to the multi-national investment firms, who are either neglecting their  fiduciary duty to protect shareholders if publicly listed, or to protect the valuable business asset that they have worked so hard to build.

They are effectively putting both shareholders and their own businesses at risk, because they have not put key person insurance in place.

Big companies, with public boards, have a responsibility to shareholders and if they’re aware of risks and don’t put the necessary measures in place to protect against them, the share price will be affected if they lose a key player due to death or disability. Privately owned companies have an obligation to the equity owners as well as their customer base to ensure that their business will be able to continue to operate in the event of the death or disability of a key person in the business.

Why might you need Key Person Insurance?

Most businesses cover themselves against the loss of their assets that don’t produce profit, such as equipment or buildings. However they more than likely fail to protect the “human asset”, which are the key people responsible for the business.

 What is the risk of not having it?

Without trying to sound too dramatic, in short it is the risk of losing it all.

How effectively can a business function without one or all of its’ key people? Investment companies are particularly vulnerable here, with research houses and investment committees from the largest investment and platform providers more often than not, determining access to their investor base from an analysis that includes reviewing key person dependency.