Private equity firms are not exercising adequate due diligence over insurance policies at portfolio companies, including directors and officers insurance, reviewing them only when they are needed, warned research commissioned by Mactavish. Furthermore, the Insurance Act 2015 requires companies to adequately investigate all the risks they face and disclose these to their insurers. The report also found that the number of private insurers in Australia has fallen from more than 100 to fewer than 20 since 2008. In addition, fewer than 33% of firms said their overall due diligence when reviewing the insurance coverage of potential acquisitions was “very robust”.
Private equity firms are not exercising adequate due diligence over insurance policies at portfolio companies, including directors and officers insurance, reviewing them only when they are needed, warned research commissioned by Mactavish. The report also found that the number of private insurers in Australia has fallen from more than 100 to fewer than 20 since 2008. In addition, fewer than 33% of firms said their overall due diligence when reviewing the insurance coverage of potential acquisitions was “very robust”.