News & Insights

D&O insurance requirements for offshore tech investors

Published 26 October 2021

Australia’s recent history of internationally successful tech start-ups such as Atlassian, Canva, Afterpay and Safety Culture, combined with a shift in the Asia Pacific as a result of COVID-19 is making Australia more attractive for technology funding and talent, according to Gallagher National Head of Financial Lines - Professional & Financial Risks, Michael Herron.

In the most recent Gallagher Business Insurance Review and Market Update H2 2021 report Herron discusses how this interest and the ability for overseas companies to list on the Australian share market brings opportunities and challenges to obtaining governance liability cover that applies locally. 

The ability for promising tech companies to have their primary listing in Australia got a boost in February 2020 when the Australian Stock Exchange (ASX) launched a new All Technology Index (XTX). This appealing alternative to the NASDAQ or the London Stock Exchange for emerging technology companies is supported by a local investor community underpinned by a US$2 trillion superannuation pool. 

With 17 non-Australian companies currently listed on the XTX Herron predicts that there’ll be many more foreign-domiciled companies that choose to come to Australia and list on the ASX as their primary listing. 
But would-be entrants to the Australian tech market face significant challenges from a directors and officers’ (D&O) liability perspective because D&O insurers tend to follow a ‘blackbox’ rule that if you’re an Australian underwriter you can only write Australian domiciled risk.

Gallagher has extensive experience in capital raising and IPOs, and has been able to successfully secure D&O insurance from supporting insurers for a number of foreign-domiciled businesses seeking a primary listing on the ASX. 

“We do this by working very closely with our clients to firstly understand their business and then ensure they are fully prepared to deal with the continuous disclosure obligations that accompany being a listed entity on the ASX,” Herron explains. 

Clients need to demonstrate to insurers that they have sufficient local representation to manage this – the foreign-domiciled companies that are best placed to do this have local ASX directors, or at least directors with ASX experience. They have well established legal panels and have done the requisite due diligence prior to listing. 

The aim is to demonstrate to insurers 
•    readiness to meet ASX continuous disclosure requirements
•    due diligence has been conducted
•    processes and procedures for managing risk. 


Read the full article

Access the full article ‘D&O challenges for overseas businesses listing on the ASX’ by downloading the full report, Business Insurance and Risk Market update H2 21. 

In the report our experts provide market insights and offer guidance on

    •    Placement and market update – how telling your business’s story helps sell your risk
    •    Claims – insurers are experiencing testing times and this may be reflected in claims service
    •    Directors and officers’ liability – D&O challenges facing overseas businesses listing on the ASX
    •    Energy sector – analysis of the insurance and regulatory issues surrounding energy asset sell-offs
    •    Renewals and reviews – why businesses need to take a lateral approach to insurance options
    •    Workplace risk – workplace resilience is at a tipping point: what this means for employers.

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective.
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