Companies are exposed to employees who turn whistle-blowers because they lack appropriate insurance cover, warns a Lloyd's underwriter.
Steve Carroll, managing director of liability specialists RE Brown Underwriting, says the 'whistle-blowing' provisions of the Public Interest Disclosure Act 1998, as well as court cases, have led to frequent employment litigation and escalating awards of damages.
"In today's business environment, too many companies, public, private and not-for-profit are exposed financially," he said.
"This is because they do not have insurance against liability risks in their own right as corporate entities, as distinct from the risks faced by their directors and officers."
In addition, securities transactions, investigation costs and shareholder derivative actions are other key areas where a company can find itself at risk.