• Wednesday, July 24, 2024
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BusinessDay

Insurance law has enterprise-wide repercussions

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 Insurance law is important to all risk managers whether they deal with insurance or not. If a big claim goes wrong, it can affect the company cash flow, balance sheet and even the directors’ personal liability.

This statement comes from Günter Schlicht, a member of the board of the Federation of European Risk Management Associations (Ferma), a lawyer by background, as the federation prepares for a major conference with the European insurance law association.

According to Schlicht: “Complex risks that need market capacity limits are likely to be extremely complicated patchwork quilts with multiple agreement partners. It has happened that one of the large partners dropped out of the consortium on a major loss.”

“This makes collecting the claim much more difficult, and can affect the company’s cash flow or ultimately the balance sheet, depending on the size of the claim, so it is important to know what co-insurance is all about also in legal terms,” he added.

Expanding regulatory penalties and the willingness of regulators to pursue individuals for regulatory breaches are another example of the way insurance law has wide repercussions on a business, said Schlicht, because neither general liability nor directors and officers insurance can pay administrative or criminal fines.

Ferma and Aida Europe have therefore chosen co-insurance and D&O as two of the four topics for discussion at their joint event, which will bring together leading jurists, insurance claims experts and risk managers from eight countries.

The other two subjects are the insurance implications of trade embargoes and serial claims and aggregate limits.

“We have called the event European insurance law: when theory meets practice, because it is so important that legal experts and risk managers understand what happens when the law is applied in business,” Schlicht commented: “It really can be an enterprise-wide issue.”