Marsh, the insurance brokerage and risk management subsidiary of US-headquartered Marsh & McLennan, has launched a service in Singapore giving cover worth up to S$ million for charities and associated bodies in the event of expensive litigation cases, a growing trend, it said yesterday.

The companies Charities Management Liability policy covers legal defence costs. It applies to “any actual or alleged wrongful act, such as an error and omission, misstatement and/or misleading statement or a breach of duty including any violation of the Singapore Charities Act, committed in the capacity as a governing board member of the charity”, the firm said in a statement.

The service has a potentially wide client base – there are more than 2,500 registered charities and exempt charities in the city-state, Marsh said.

Among controversies in the charity sector in Singapore were claims, several years ago, of misuse of organisation funds at the National Kidney Foundation. There were a string of lawsuits, prompting calls for tighter governance and controls at such organisations.

Defence costs

Marsh said its service “provides advancement in defence costs in respect of any claim alleging fraud and dishonesty - which is typically excluded - until conduct is established through final adjudication by a court of law”. If a court finds fraud or dishonesty conduct occurred, the policy will not respond and these costs will be recovered, it said. The policy covers directors, officers, trustees, and committee members of charitable organisations.

With high net worth individuals in Asia increasingly interested in philanthropy, according to organisations such as UBS, it also brings potential issues if or when there are problems over management of trusts and other structures.

"Litigation involving charities in Singapore is increasing, with many high-profile cases making headlines," said Gary Chua, Marsh's FINPRO Practice Leader for Southeast Asia. "Directors of these charitable organisations are finding themselves as exposed as their listed company counterparts. This highlights that, irrespective of organisation type, these risks are very real."

Marsh's Charities Management Liability is offered exclusively through Marsh, and is underwritten by Catlin (Singapore), a member of the Lloyds of London insurance market. Marsh & McLennan, with annual revenues of over $11 billion, is one of the world’s biggest financial companies.