Insurance Law
Insurance Law The importance of insurance as a key element in both the domestic and workplace environment is self-evident. Ongoing world events have also continued to shape the makeup of insurance. Terrorism in Mumbai and off the Somalia coast has altered the insurance industry’s scope of services, emphasising the need to provide cover against terrorist attacks. Elsewhere, regulation governing Australia’s insurance industry has also been impacted by recent disasters, both natural and man-made in nature. In November last year, US regulators indicated their intention to press Barack Obama on Bermuda’s insurance industry once he takes office. However, the main factor has undoubtedly been the ongoing financial turbulence affecting economies worldwide. The shortage of credit has exposed longstanding weaknesses in various companies and industries, leading to revaluations in insurance and reinsurance contracts. Closer to home, the suspension of trade credit insurance has affected many of the UK’s business operations. It has already claimed Woolworths, as the high street retailer was forced into administration after its insurers refused to cover the store’s supplies. As a result, Woolworths had to draw upon its already abused credit facilities to pay off suppliers, bringing it to the limit of what its bankers were prepared to lend. In addition, just this month insurance giant Legal & General announced that it is shedding up to 560 jobs across the UK as part of a drive to cut its workforce by 10%. Like most insurance companies, L&G has been hit by the financial and economic turmoil. It made a loss of nearly £1.5 billion last year, mainly due to falling share prices. On the other side of the pond, American International Group (AIG) has received assistance from the US government in the shape of a bailout package that has gradually crept up to total over $170 billion. The company was deemed to be too extensively intertwined with the global financial system to be allowed to fail. Jolted by these events, many countries have passed recent legislation to amend their respective regulations governing the insurance industry and the provision of insurance/reinsurance services in general. For example, the English and Scottish Law Commissions are setting up a joint review of insurance contract law to examine at least two key areas of insurance contract law: non-disclosure, which
will necessarily include misrepresentation, and breach of warranty. Additional areas such as the law on insurable interest and joint policies are also in the pipeline to be reviewed. Insurance contract law in Scotland is broadly similar to that in England and Wales. There are, however, some important differences. For example, in Scotland a policyholder may be able to claim losses caused by an insurer’s unjustifiable delay in settling a claim, whereas in England this is not possible. There is also a different test for materiality in life insurance cases in Scotland. Ernst & Young’s 2009 Insurance Outlook for Europe notes that European insurers will face enormous challenges in 2009 as Europe heads into a recession. However, the report does claim that there are opportunities to capitalise on innovative products in areas such as health insurance and retirement income. Health insurance in particular presents accelerated growth opportunities in Europe for 2009, for both life and non-life companies. The report states that in order to achieve quality and cost-containment objectives the market will need to consolidate, and governments have already started to look to private insurers to achieve these goals. Central and Eastern European insurance markets are projected to grow, but at a slower pace. Ernst & Young advises that insurers should focus on simple and transparent protection products, such as savings, endowment and health. Longer term, demand will increase for property-casualty insurance and for reinsurance for natural catastrophes and commerce, such as shipping, ports and pipelines. In April this year the EU adopted the Solvency II insurance regulatory framework, which aims to enhance policyholder protection and increase competition in the EU insurance market by updating the approach taken to determine the capital an insurance undertaking should hold against unforeseen events. The Directive also aims to enhance the supervisory review process. Solvency II is expected to introduce a common European approach based on economic principles for the measurement of assets and liabilities. In order to meet its objectives, it will need to be a risk-based system, meaning that risk is measured on consistent principles and that capital requirements are aligned with the underlying risks of the company. In the current environment insurance lawyers are tasked not only with keeping up to date with the myriad changes taking place in international insurance law, but also with applying the law frequently, and to increasingly complex cases. Over the page Corporate International highlights some prominent insurance lawyers from around the world who are able to do just that.
May 2009 Corporate INTL 103
Insurance Law
Insurance Law
1 2
5
1
3
2
4
6
3
7. 8 9 10
11 12
01 02
Canada - Torys LLP Blair W. Keefe T: 416.865.8164 F: 416.865.7380 bkeefe@torys.com
United States - Adorno,Yoss,Alvarado & Smith P.C. Patrick A. Cathcart 213 229-2400 pcathcart@adorno.com www.adorno.com
03 104 Corporate INTL May 2009
04 05 06
The Netherlands - Van Steenderen MainportLawyers B.V. Arnold Stendahl T: +31 10 266 78 66 arnold.stendahl@mainportlawyers.com www.mainportlawyers.com
Sweden - Advokatfirman Vinge KB Per Johan Eckerberg Partner D: +46 8 614 3119 T: +46 8 614 3000 perjohan.eckerberg@vinge.se
Germany - Nรถrr Stiefenhofer Lutz Michael Molitoris +49 89 286 28 146 +49 89 28 01 10 michael.molitoris@noerr.com
07 08 09
Serbia - IKRP (Belgrade) IKRP Rokas & Partneri DOO Marija Petrovic - Partner (+381 11) 2635184 serbia@rokas.com www.rokas.com
Greece - IKRP (Athens) I.K. Rokas & Partners Law Firm Alkistis Marina Christofilou,LL.M. (Lond) Deputy Managing Partner (+30) 210 3616816 a.christofilou@rokas.com www.rokas.com
Cyprus - Georgiades &Mylonas - Advocates &Legal Consultants Yiannos G. Georgiades 0 - Managing Partner Rebecca E. Howarth - Legal Consultant & Advisor
00 357 22 819 292 Yiannos.georgiades@gmadvocates.com Rebecca.howarth@gmadvocates.com enquiries@gmadvocates.com / wwvw.gmadvocates.com
10
Israel - Naschitz, Brandes & Co. Australia - Richard Jowett Peter Gad Naschitz +972 623 5000 61 (0)33 8601 4500 pnaschitz@nblaw.com RICHARD.JOWETT@hfw.com www.nblaw.com www.hfw.com
11
Singapore - Rajah & Tann LLP Quentin Loh,S.C. - Partner DID: +65-6507 9511 Fax: +65-6438 9622 Main Line: +65-6507 9500 quentin.loh@rajahtann.com
12
Australia - Holman Fenwick Willan Richard Jowett RICHARD.JOWETT@hfw.com 61 (0)3 8601 4500 www.hfw.com
May 2009 Corporate INTL 105