A court decision on whether senior executives and directors at The Star Entertainment Group breached their duties of care and diligence has implications for understanding how directors and officers cover responds, a law firm says.

The Federal Court found two former executives breached their duties in relation to their handling of the risks associated with money laundering and criminal activity at the casino.

But the court dismissed the Australian Securities and Investments Commission case against seven former non-executive directors after finding they did not breach their duties.

Corrs insurance partner Lucy Terracall says the judgment provides “a rare and detailed look at how regulatory enforcement, governance failures and insurance protections intersect in practice”.

The court did not consider Star’s insurance arrangement but the case offers a framework for understanding how indemnities and D&O insurance would typically response in similar circumstances.

“In a typical D&O program, findings against a company’s former CEO or general counsel would shift the burden from corporate indemnification to side A insurance, while non‑executive directors – who were ultimately successful – would retain the benefit of company‑funded defence costs,” Ms Terracall said.

The Star is also facing class actions related to alleged breaches of its continuous disclosure obligations as a listed company.

Ms Terracall says policy structure is important in matters involving both regulatory action and shareholder class actions.

“Where regulatory proceedings and securities claims arise from the same factual matrix, the D&O program can be engaged on multiple fronts,” Ms Terracall said. “Without a quarantined side A limit, individual directors may find themselves competing with the company for the same pool of insurance.”

Ms Terracall does not expect the Federal Court judgment to materially shift D&O market conditions.

“The judgment is instructive, but it does not create new legal principles. Its impact is more likely to be felt in the questions insurers ask at renewal – particularly around governance processes and board oversight,” she said.

“For boards and executives, the decision is a timely prompt to review indemnity arrangements, D&O program structure and governance frameworks.”