UK Decision Puts Life Company Non Executive Directors On Notice

In a decision which is likely to be persuasive in Australia, the English High Court has cleared the way for a life insurance company to sue some of its former non executive directors for up to £3.3 billion over a strategy they implemented between 1993 and 2000 to contain losses.

Although important in its own right, the decision also provides further food for thought about the substantial exposures that directors now face, including those non executive directors who may consider they play only minor roles in some decision making.

In Equitable Life Assurance Society v Bowley & Ors, the English High Court emphasised the importance of non executive directors seeking advice before making decisions that may affect policyholder/investor rights. It also ruled that directors who delegate authority are not absolved from supervisory responsibility and the need to exercise independent judgment.