I think you have a misunderstanding of what a Directors Insurance policy does. It covers directors against claims arising from "wrongful acts" - which a lack of disclosure would certainly cover. The director would only need to inform the insurer of the claim, not of the wrongful act in advance
Here's an example from CGU:
View attachment 729906
The only question is what the level of cover is - even if it's only $20m then it's worth the lawyers pursuing the class action. In the case of SGH, the insurance policy paid out $32.5m
http://www.abc.net.au/news/2017-07-11/slater-and-gordon-settles-class-action/8696882
Shareholders pursuing troubled legal firm Slater and Gordon will receive just $36.5 million, after the firm agreed to settle a number of class actions against it.
-Key points:
- Hedge funds will now assume ownership of the 82-year old law firm
- Directors' indemnity insurance the only source of funds available from Slater and Gordon
- $36.5 million settlement only a fraction of the billions lost over the past two years
Slater and Gordon will pay $32.5 million from its directors' and senior officers' liability insurance, while a group of hedge funds which bought the company's debt will chip in the other $4 million.
The bulk of the proceeds will go to clients of Slater and Gordon's cross-town legal rivals, Maurice Blackburn, who initiated the first class action.
