A clear majority (65%) of company directors and business leaders think that the Government should proceed with the introduction of the Central Bank (Amendment) Bill 2019, while 56% are personally in favour of the concept of directors’ individual accountability, according to the latest quarterly Director Sentiment Monitor survey by the Institute of Directors (IoD) in Ireland.
Support from directors and business leaders from the financial services sector alone is even higher, at 67% and 69%, respectively.
The Central Bank (Amendment) Bill 2019 includes provisions relating to the Senior Executive Accountability Regime (SEAR) and Conduct Standards on all Regulated Financial Service Providers (RFSPs). The Bill is currently at the Third (Committee) Stage in the legislative process in the Oireachtas.
IoD Ireland’s quarterly Director Sentiment Monitor survey, for Q1 2021, was conducted between 26th March and 12th April 2021, and was completed by 245 directors and business leaders, who are members of IoD Ireland. The Director Sentiment Monitor tracks business sentiment on a quarterly basis.
Commenting on the latest research findings, Maura Quinn, Chief Executive, the Institute of Directors in Ireland, said:
“The vast majority of company directors are both cognisant of their fiduciary duties and act responsibly. Indeed, the importance of the role has never been so affirmed as it has been during the COVID-19 pandemic. Boards are working with CEOs and senior management in trying to navigate successfully through the immense challenges many companies have faced. Most directors take their responsibilities very seriously and the fact that a clear majority of those surveyed supports the Government’s Bill on accountability is indicative of that.”
The new IoD research also finds that 87% of business leaders view Directors & Officers (D&O) Liability Insurance ‘an essential’ that all directors should have. However, a substantial majority (63%) say they do not have their own personal D&O Insurance in addition to that provided by the organisations on whose boards they serve. Furthermore, 61% of those who are currently covered by D&O Insurance say the cost has increased either marginally or significantly over the past year.
Maura Quinn, Chief Executive, the Institute of Directors in Ireland, added:
“In what is an increasingly regulated and onerous governance environment for directors, who face many risks, it is important that directors have Directors & Officers (D&O) Insurance and should, at a minimum, have insurance from the organisations on whose boards they serve. In this context, the increased cost of D&O insurance is concerning as it may limit and prevent directors being insured.”
Among the selected advance key findings of the Director Sentiment Monitor survey for Q1 2021 are:
Accountability
Individual accountability – in favour? When asked the question, ‘Are you personally in favour of the concept of directors’ individual accountability, as proposed by the Senior Executive Accountability Regime (SEAR)?’ the options selected by business leaders were as follows
- Yes: 56%
- No: 19%
- Don’t know: 25%
When looking at respondents in the financial sector alone, the figures are: Yes (69%), No (19%), Don’t know (13%).
Accountability and proposed legislation: When asked the question, ‘Do you think the Government should proceed with the introduction of the Central Bank (Amendment) Bill 2019 – which includes provisions relating to Senior Executive Accountability Regime (SEAR) and Conduct Standards on all Regulated Financial Service Providers (RFSP)?’ the respondents answered as follows:
- Yes: 65%
- No: 11%
- Don’t know: 25%
When looking at respondents in the financial sector alone, the figures are: Yes (67%), No (19%), Don’t know (15%).
Directors & Officers (D&O) Insurance
D&O cover – ‘an essential’? When asked the question, ‘Do you consider that Directors & Officers (D&O) Insurance is ‘an essential’ that all directors should have?’ business leaders selected as follows:
- Yes: 87%
- No: 4%
- Not sure: 9%
Personal D&O cover? When asked the question, ‘Do you have your own personal Directors & Officers (D&O) Insurance for each board on which you serve, in addition to that provided by the company/organisation?’ the respondents answered as follows:
- Yes: 29%
- No: 63%
- Not sure: 3%
- Not applicable: 4%
D&O cover – more difficult to source? Those who answered ‘yes’ to the previous question were then asked the question, ‘Do you believe it has become more difficult to obtain D&O Insurance cover over the past year?’ and they selected as follows:
- Yes: 37%
- No: 25%
- Not sure: 37%
D&O premiums – cost? The same cohort was also asked the question, ‘In respect of cost, which of the statements below is correct with regard to your D&O Insurance policy over the past year?’ and they chose as follows:
- Increased significantly: 25%
- Increased marginally: 36%
- No change: 12%
- Decreased significantly: 0%
- Decreased marginally: 0%
- Not sure: 21%
- Not applicable: 6%
Reasons for no personal D&O cover: Those who answered ‘No’ to the aforementioned question, ‘Do you have your own personal Directors & Officers (D&O) Insurance for each board on which you serve, in addition to that provided by the company/organisation?’ were then asked this follow-on question, ‘What do you believe is the primary reason for you deciding not to take out individual D&O insurance for any board on which you serve?’ and they selected as follows:
- Too expensive: 8%
- Too difficult to source a policy that matches my requirements: 6%
- Too difficult to source an Irish policy: 6%
- Rates are not competitive enough: 2%
- The board/s I sit on has a general policy for all directors: 53%
- Haven’t had the time, but plan to: 13%
- Unlikely to need it: 8%
- Other: 5%