AIDA-Europe and Ferma invite you to come to Paris on June 3rd and participate in the one day conference on questions of Commercial Insurance Law which they jointly organise. As we all know Risk and Insurance Managers are permanently confronted with a wide scope of legal questions. We also know that legal experts can profit from looking at what happens in practical business life. This is why we want to bring together the members of Ferma and AIDA-Europe under the motto “when theory meets practice”. In four panels risk managers, academics, lawyers and other legal experts will cover important legal aspects of the following topics: - Co-Insurance: Who owes what, when and to whom? - Embargo Regulation: The discordant music of European and national public orders - Serial Claims: When fiction trumps reality - D&O Insurance: Phantasms on forbidden guarantees

1. INTRODUCTION
Colin
Croly
–
AIDA
Europe
Chairman
Jorge
Luzzi
–
FERMA
President

2. CO-­‐INSURANCE

3. Co-­‐insurance
Theory
and
prac2ce
Prof.
Alberto
Mon2
InsEtute
for
Advanced
Study
IUSS
Pavia
Studio
Legale
MonE
–
Law
Firm
(Milano)
Email:
alberto.mon2@iusspavia.it
European Insurance Law: When Theory Meets Practice
AIDA Europe / FERMA Conference
Paris, 3 June 2013

4. Co-­‐insurance:
theory
Risk
sharing
(two
or
more
par+es)
• Between
insurer
and
insured
– Co-­‐insurance
clauses
(reten+on
/
deduc+ble)
• MulEple
insurers
on
risk
– Co-­‐insurance
v.
reinsurance
(but
also:
co-­‐reinsurance)
– Co-­‐insurance
v.
co(re)-­‐insurance
pools

5. Co-insurance: theory (cont’d)
Sharing
of
risk
among
insurers
(vis-­‐à-­‐vis
the
insured)
• Horizontal
– shares
or
quotas
of
the
same
risk
layer
• Ver2cal
– different
risk
layers
(primary/excess)

6. Co-­‐insurance
Horizontal
risk
sharing
Insurer
1
40%
Insurer
2
35%
Insurer
3
25%

7. Co-­‐insurance
Ver+cal
risk
sharing
• Insurer
3
Second
excess
(€15mn
XS
€22.5mn)
• Insurer
2
First
excess
(€12.5mn
XS
€10mn)
• Insurer
1
Primary
(€10mn
limits)

8. Co-­‐insurance
Ver+cal
and
horizontal
risk
sharing
• Insurer
5
(50%)
+
Insurer
6
(50%)
Second
excess
(€15mn
XS
€22.5mn)
• Insurer
3
(60%)
+
Insurer
4
(40%)
First
excess
(€12.5mn
XS
€10mn)
• Insurer
1
(55%)
+
Insurer
2
(45%)
Primary
(€10mn
limits)

9. Co-­‐insurance
Historical
perspec+ve
• “Ancient”
paradigm
– Common
pracEce
in
Europe
in
medieval
Emes
– Insurance
broker
/
Leading
underwriter
– Slip
method
/
Following
market
• “Modern”
paradigm
– Large
insurance
companies
(from
XVII
cent.)
– Risk
sharing
agreement
among
insurance
companies
(ini+a+ve
of
the
first
insurer)

10. Co-­‐insurance
Legal
rules
and
defini+ons
European
Union
law
•
Community
co-­‐insurance
First
step
towards
market
liberalizaEon
(1978)
– DirecEve
1978/473
(ArEcle
2)
– DirecEve
2009/138
[Solvency
II]
(ArEcle
190)
• Large
risks
covered
by
a
single
contract
• Role
of
leading
insurer
(fixing
terms
and
condiEons
of
coverage
and
premium)

11. Co-­‐insurance
Legal
rules
and
defini+ons
(cont’d)
NaEonal
laws
(Europe)
•
Lack
of
harmonisa2on
–
Different
legal
regimes
–
Different
market
prac+ces

12. Co-­‐insurance
Legal
rules
and
defini+ons
(cont’d)
Italian
law
•
Community
co-­‐insurance
– ArEcles
161-­‐162
of
the
Italian
Insurance
Code
• Single
contract
(same
dura+on
/
global
premium
/
signed
by
all
co-­‐insurers)
• Leadership
clause
for
the
management
of
the
contract
according
to
express
terms
and
market
pracEces
• Leading
insurer
fixes
terms
and
condiEons
of
coverage
and
premium
for
all
parEcipaEng
insurers

13. Co-­‐insurance
Legal
rules
and
defini+ons
(cont’d)
Italian
law
•
Indirect
co-­‐insurance
– ArEcle
1910
of
the
Italian
Civil
Code
• MulEple
independent
contracts
covering
the
same
risk
• Duty
to
disclose
(at
all
relevant
+mes)
• Default
rule:
each
insurer
is
liable
for
the
full
extent
of
its
contract
(limit
Indemnity
principle)
/
Right
of
contribuEon
• The
rule
can
be
derogated
by
contract
(propor+onal
liability
/
excess
coverage)

14. Co-­‐insurance
Legal
rules
and
defini+ons
(cont’d)
Italian
law
•
Direct
co-­‐insurance
– ArEcle
1911
of
the
Italian
Civil
Code
• Focus
on
horizontal
risk
sharing
• Default
rule:
each
co-­‐insurer
liable
for
its
own
share
only
(even
if
a
single
contract
is
signed
by
all)
• Case
law:
leadership
agreement
(“clausola
di
delega”)
does
not
change
the
default
rule

15. Co-­‐insurance
Issues
of
prac+cal
relevance
(Italian
law)
Powers
of
leading
insurer
depend
on
the
leadership
clause
(“clausola
di
delega”):
• Authority
to
bind
co-­‐insurers
at
the
Eme
of
conclusion
of
the
contract
–
requirements
(and
effects
of
lack
thereof)
• Receipt
of
premium
payment,
noEces
and
communicaEons
• Coverage
determinaEons
and
indemnity
payment
(limits:
good
faith
/
but
also:
claims
control
/
claim
coopera+on
clauses)

16. Co-­‐insurance
Issues
of
prac+cal
relevance
(Italian
law,
cont’d)
• Statute
of
limita2ons:
effects
of
noEce
to
leading
insurer
only
• Standing
to
sue
of
leading
insurer:
– acEon
to
recover
premium
(against
policyholder)
– subrogaEon
acEon
(against
liable
third
par+es)
– rescission
acEon
(misrepresenta+on
/
failure
to
disclose)
• Standing
to
be
sued
of
leading
insurer:
effects
of
lawsuit
insEtuted
against
leading
insurer
only
• Wording
of
leadership
clause
is
KEY

17. THANK
YOU!
alberto.mon2@iusspavia.it
Prof.
Alberto
Mon2
Ins2tute
for
Advanced
Study
«IUSS
Pavia»
Studio
Legale
Mon2
–
Law
Firm
(Milano)
Email:
alberto.mon2@iusspavia.it

18.
AIDA-­‐EUROPE
–
FERMA
Paris,
3
June
2013
COINSURANCE
/
GROUPS
OF
INSURERS:
WHO
OWES
WHAT,
WHEN
AND
TO
WHOM?
Alexis
Valençon
Partner,
BOPS

19. Coinsurance/groups
of
insurers:
Who
owes
what,
when
and
to
whom?
0.
Introduc2on:
Defining
coinsurance
1. Issues
rela2ng
to
the
cashflows
from
the
insured
to
the
co-­‐insurers
2. Issues
rela2ng
to
the
cashflows
from
the
co-­‐insurers
to
the
insured
3. Issues
rela2ng
to
the
cashflows
between
co-­‐insurers

20. INTRODUCTION:
DEFINING
COINSURANCE
• DefiniEon
of
community
coinsurance
by
Solvency
II
(art.
190).
• The
French
Insurance
Code
does
not
offer
a
definiEon
of
coinsurance.
• Coinsurance
may
include
programmes
consEtuted
of
several
insurance
layers
according
to
the
Cour
de
cassa+on
(1st
civ.
div.,
28
Nov.
1995,
Nos.93-­‐12.904
&
93-­‐11.003).
• DisEnguishing
“horizontal”
and
“verEcal”
coinsurance.

21.
I.
ISSUES
RELATING
TO
THE
CASHFLOWS
FROM
THE
INSURED
TO
THE
CO-­‐
INSURERS
(slide
1)
A.
“Horizontal”
coinsurance
• QuesEon:
What
happens
if
the
insured
pays
only
part
of
the
premium?
• Answer:
Coinsurers
may
suspend
the
whole
cover
(Cour
de
cassa+on,
1st
civ.
div.,
26
April
1984,
No.83-­‐12.460).

22.
I.
ISSUES
RELATING
TO
THE
CASHFLOWS
FROM
THE
INSURED
TO
THE
CO-­‐INSURERS
(slide
2)
B.
“VerEcal”
coinsurance
• QuesEon:
What
happens
if
the
insured
pays
only
part
of
the
premium
(i.e.
does
not
pay
the
premiums
corresponding
to
all
the
layers)
?
• Answer:
A
parEal
cover
is
in
principle
possible,
as
the
layers
are
independent
(primary
vs.
excess).

23.
II.
ISSUES
RELATING
TO
THE
CASHFLOWS
FROM
THE
CO-­‐
INSURERS
TO
THE
INSURED
(slide
1)
A.
“Horizontal”
coinsurance
• QuesEon
1:
Are
the
coinsurers
jointly
and
severally
liable?
• Answer:
ArEcle
1202
of
the
French
Civil
Code:
“Joint
and
several
liability
may
not
be
presumed:
it
must
be
expressly
sEpulated”.
• NB:
In
pracEce,
coinsurers
rely
on
clauses
expressly
excluding
joint
and
several
liability
(Cour
de
cassa+on,
1st
civ.
div.,
12
May
2011,
Nos.10-­‐18.399
&
10-­‐18.541).

24.
A.
“Horizontal”
coinsurance
• QuesEon
2:
What
happens
in
the
absence
of
a
clause
expressly
excluding
joint
and
several
liability?
• Answer:
The
joint
and
several
liability
of
the
leading
insurer
may
depend
on
the
power
it
is
given
by
the
other
co-­‐insurers
(Cour
de
cassa+on,
2nd
civ.
div.,
18
Jan.
2006,
No.04-­‐15.907).
II.
ISSUES
RELATING
TO
THE
CASHFLOWS
FROM
THE
CO-­‐
INSURERS
TO
THE
INSURED
(slide
2)

25.
B.
“VerEcal”
coinsurance
• QuesEon:
What
deducEble
should
the
excess
layer
apply
when
a
loss
occurs
and
the
primary
layer
has
been
exhausted?
• Answer:
2
opEons:
» “Step
down”
/
“drop
down”.
» The
primary
layer’s
limit
of
coverage
acts
as
the
excess
layer’s
deducEble.
II. ISSUES RELATING TO THE CASHFLOWS FROM THE CO-
INSURERS TO THE INSURED (slide 3)

26.
A.
“Horizontal”
coinsurance
• QuesEon
1:
When,
in
the
lifespan
of
the
coinsurance,
can
the
leading
insurer
be
liable
to
the
other
co-­‐insurers?
• Answer:
During
the
whole
lifespan
of
the
coinsurance:
» The
coinsurance’s
birth:
assessing
the
risk.
» The
coinsurance’s
life:
assessing
the
loss
/
defending
the
coinsurance
against
the
insured.
» The
coinsurance’s
death:
terminaEng
the
co-­‐insurance
contract.
III. ISSUES RELATING TO THE CASHFLOWS BETWEEN
CO-INSURERS (slide 1)

27.
A.
“Horizontal”
coinsurance
• QuesEon
2:
What
recourses
are
available
to
the
leading
insurer
against
the
other
co-­‐insurers,
in
case
of
joint
and
several
liability?
• Answer:
ArEcle
1214
of
the
French
Civil
Code.
• NB:
May
be
difficult
in
pracEce
(Cour
de
cassa+on,
1st
civ.
div.,
7
July
1992,
No.90-­‐13.565).
III. ISSUES RELATING TO THE CASHFLOWS BETWEEN
CO-INSURERS (slide 2)

28.
B.
“VerEcal”
coinsurance
• Issue:
The
payment
of
the
defence
fees
by
the
primary
layer
when
it
is
obvious
that
it
will
be
exhausted
and
will
not
possibly
benefit
from
a
recourse
against
the
liable
third
party.
• Possible
soluEon:
Agreement
before
/
arer
the
loss
with
the
excess
layer?
III.
ISSUES
RELATING
TO
THE
CASHFLOWS
BETWEEN
CO-­‐INSURERS
(slide
3)

29. AIDA-­‐EUROPE
–
FERMA
Paris,
3
June
2013
THANK
YOU
VERY
MUCH
FOR
YOUR
ATTENTION
!
Alexis
Valençon
Partner,
BOPS
47,
rue
Dumont
d’Urville
–
75116
Paris
Tel:
+33.170.37.39.00
–
Fax:
+33.170.37.39.01

30. View
from
the
day-­‐to-­‐day
insurance
world
• Main
concerns
Ø Coinsurance
may
not
be
an
obstacle
for
free
compeEEon
Ø SME’s
,
Public
InsEtuEons
&
(Non)-­‐Listed
MulEnaEonals
Ø Insurance
Block
ExempEon
RegulaEon
Ø Transparency
is
THE
KEYWORD

31. View
from
the
day-­‐to-­‐day
insurance
world
• Over-­‐regula2on
of
coinsurance
in
the
insurance
world
Ø Insurance
capacity
Ø InternaEonal
markets
Ø Premium/CondiEons/Service/Efficiency/RaEng/Solvability
Ø Long
Eme
partnership
throughout
the
various
insurance
lines
Ø NegoEaEons
in
a
broker’s
market

32. View
from
the
day-­‐to-­‐day
insurance
world
• Over-­‐regula2on
of
coinsurance
in
the
insurance
world
Ø Insurance
capacity/technical
knowledge
ü Some
pools
have
been
created
to
avoid
lack
of
insurance
capacity
(e.g.
Nuclear,
Terrorism,
Cat
Nat…)
ü Even
without
a
formal
pool,
coinsurance
is
oren
needed
because
of
capacity/technical
knowledge.
The
subscripEon
market
avracts
a
great
diversity
of
insurance
companies.
The
subscripEon
process
allows
non-­‐specialized
insurers
to
provide
capacity
to
cover
a
risk
relying
on
the
leader’s
experEse
in
that
specific
area
of
risk.
ü Disappearance
of
the
block
exempEon
might
lead
to
the
non-­‐
insurability
of
some
specific
risks

33. View
from
the
day-­‐to-­‐day
insurance
world
• Over-­‐regula2on
of
coinsurance
in
the
insurance
world
Ø Interna2onal
markets
ü InterpretaEon
of
terms
and
condiEons
of
the
insurance
wording
(Napoleon
law
versus
Common
law)
ü Use
of
different
local
languages
in
e.g.
third
party
liability
claims
where
foreign
insurance
companies
use
the
English
language
only
ü Delay
in
claims
handling
due
to
the
non-­‐presence
of
some
insurance
companies
in
the
market
the
claim
occurred

34. View
from
the
day-­‐to-­‐day
insurance
world
• Over-­‐regula2on
of
coinsurance
in
the
insurance
world
Ø Premium/Condi2ons/Service/Efficiency/Ra2ng/Solvability
ü Different
premiums
per
coinsurer
should
not
necessary
cause
problems,
but
can
be
source
of
dispute,
is
less
efficient
ü Lead
insurer
is
fronEng
the
local
policy:
how
will
different
terms
and
condiEons
match
with
reinsurer
of
the
local
policy?
ü Different
terms
and
condiEons
(e.g.
triggers,
exclusions,
extensions...)
might
lead
to
difficult
claims
handling
ü The
pracEce
of
selecEng
a
lead
insurer
is
Eme-­‐efficient,
avoiding
heavy
and
complex
individual
negoEaEon
with
every
possible
coinsurer
ü This
pracEce
is
bringing
legal
certainty
for
the
parEes
when
it
comes
to
handling
of
claims

35. View
from
the
day-­‐to-­‐day
insurance
world
• Over-­‐regula2on
of
coinsurance
in
the
insurance
world
Ø Long
2me
partnership
throughout
the
various
insurance
lines
ü ConEnuity,
Long
term
partnership
with
the
insurer(s)
leads
to
a
bever
spread
of
risk
over
the
years
and
lead
ulEmately
to
more
stable
premiums
ü The
number
of
possible
lead
insurers
with
a
well
funcEoning
network
is
limited
ü In
case
of
series
of
large
claims,
discussions
of
coverage,
…conEnuity
has
always
it’s
added
value
ü Insurance
is
people’s
business,
parEes
who
know
and
trust
each
other.
The
premium
is
not
only
the
price
paid
for
the
terms
and
condiEons,
but
also,
even
mainly
for
the
service
in
case
of
claim.

36. View
from
the
day-­‐to-­‐day
insurance
world
• Over-­‐regula2on
of
coinsurance
in
the
insurance
world
Ø Nego2a2ons
in
a
broker’s
market
ü The
first
phase
of
the
subscripEon
process,
the
selecEon
of
the
lead
insurer
is
a
highly
compeEEve
process
where
every
potenEal
insurer
willing
to
become
the
leader
will
be
contacted,usually
by
a
broker
ü A
broker’s
market
is
even
a
bever
guarantee
to
open
compeEEon:
even
if
the
lead
insurer
would
try
to
align
his
quote
to
the
higher
one
of
a
coinsurer,
the
broker
will
give
the
opportunity
to
an
other
leader
to
quote
the
business
ü If
the
leader
quotes
really
to
low,
it
will
jeopardize
the
relaEonship
already
before
the
start
of
the
insurance
cover

37. View
from
the
day-­‐to-­‐day
insurance
world
• Conclusion
Ø Professional
negoEaEon
&
placing
of
an
industrial
insurance
program
is
much
more
complex
than
obtaining
the
cheapest
price
and
the
broadest
condiEons
Ø One
insurer
covering
100%
of
the
risk
is
certainly
the
most
efficient
way
of
placement,
but
an
open
&
transparent
negoEated
coinsurance
in
a
complex
risk,
is
not
only
a
must
but
also
avracEve
and
compeEEve,
whatever
the
way
it
is
realized.
Ø It
is
vital
to
preserve
these
capabiliEes
and
ensure
the
EU
compeEEveness
with
other
coinsurance
markets
outside
the
European
Union
Ø Transparency
is
the
KEYWORD.
If
all
steps
are
taken
in
full
transparency
between
insured,
potenEal
insurer(s)
and
broker(
if
any),
the
existence
of
coinsurance
is
a
non-­‐issue.

38. View
from
the
day-­‐to-­‐day
insurance
world
• Disclaimer
Ø This
presentaEon
reflects
my
personal
view
on
the
regulaEon
of
compeEEon
in
the
negoEaEon
and
placement
of
insurance
programs
in
the
EU.
It
does
not
necessary
reflects
the
point
of
view
of
FERMA
Ø It
concerns
my
views
on
some
issues
regarding
the
negoEaEon
and
placement
of
large
complex
insurance
programs
of
a
listed
mulEnaEonal,
based
on
own
experience
as
current
risk
and
insurance
manager,
former
insurance
broker.
Ø SME’s,
Public
&
Financial
InsEtuEons
may
have
other
needs
and
regulaEons
which
do
not
necessary
lead
to
the
same
conclusions

39. View
from
the
day-­‐to-­‐day
insurance
world
• Thanks!
• Ques2ons?

40.
AIDA
Europe
and
FERMA
would
like
to
thank
for
its
support

41. SERIAL
CLAIM

42. AggregaEon
of
Serial
Claims
• Treatment
of
many
claims
or
losses
as
one
claim
for
the
purposes
of
the
deducEble,
the
limits
and
noEce
provisions
of
the
insurance
policy
• The
unifying
factor
depends
on
the
policy
wording;
for
example
– “series
of
claims
resul+ng
from
a
single
act”
– “all
occurrences
aLributable
to
one
source”
– “series
of
events
origina+ng
from
one
cause”
– “each
and
every
loss
or
series
of
losses
arising
from
one
event”
– “an
Occurrence…aLributable
directly,
indirectly
or
allegedly
to
the
same
actual
or
alleged
event,
condi+on,
cause,
defect,
hazard
and/or
failure
to
warn
of
such”

43. AggregaEon:
Event
vs
Cause
AXA
v
Field
[1996]
HL
• “…an
event
is
something
which
happens
at
a
par+cular
+me,
at
a
par+cular
place,
in
a
par+cular
way”
• “A
cause
is…something
altogether
less
constricted.
It
can
be
a
con+nuing
state
of
affairs;
it
can
be
the
absence
of
something
happening”

44. AggregaEon
by
Event
Aioi
Nissay
Dowa
v
Heraldglen
[2013]
• Stated
limit
and
excess
for
“each
and
every
loss”
• “each
and
every
loss”
shall
mean
“each
and
every
loss
or
accident
or
occurrence
or
series
thereof
arising
out
of
one
event”
• On
September
11th,
2001,
two
hi-­‐jacked
aircrar
crashed
into
the
North
and
South
Towers
of
the
World
Trade
Center
• Was
there
one
loss,
or
two?

45. Pension
misselling
Lloyds
TSB
v
Lloyds
Bank
Insurance
[2003]
HL
“…series
of
claims
[resulEng]
from
any
single
act
or
omission
(or
a
related
series
of
acts
or
omissions)”
Countrywide
v
Marshall
[2003]
“…one
occurrence
or
occurrences
of
a
series
consequent
upon
or
aLributable
to
one
source
or
original
cause”

46. Savings
&
Loan
Collapse
American
Centennial
Insurance
v
INSCO
[1996]
• “…series
of
events
or
occurrences
origina+ng
from
one
cause…”
• Claims
against
directors
and
auditors
following
collapse
of
S&L
bank
• What
was
the
“cause”
of
the
claims?

47. Why
Does
AggregaEon
Maver?
• Limit
and
deducEble
• Effect
of
NoEce
“The
Assured
shall
give
to
the
Underwriters
no+ce
in
wri+ng
as
soon
as
prac+cable
of
any
circumstance
of
which
they
shall
become
aware
during
the
period
specified
in
the
Schedule
which
may
give
rise
to
a
loss
or
claim
against
them.
Such
no+ce
having
been
given
any
loss
or
claim
to
which
that
circumstance
has
given
rise
which
is
subsequently
made
aer
the
expira+on
of
the
period
specified
in
the
Schedule
shall
be
deemed
for
the
purpose
of
this
Insurance
to
have
been
made
during
the
subsistence
hereof.”
HLB
Kidsons
v
Lloyd’s
Underwriters
[2008]
CA
Rothschild
v
Collyear
[1999]
• How
many
and
which
policies
are
on
risk?

48. Effect
of
Policyholder’s
Insolvency
• Statutory
transfer
of
insolvent
policyholder’s
rights
against
available
insurance
to
third
party
claimants
Third
Party
(Rights
against
Insurers)
Act
1930
• “Dash
for
Cash”
The
available
insurance
is
insufficient
to
cover
all
third
party
claims
• Cox
v
Bankside
Members
Agency
[1995]
CA
Chronological
priority,
or
“first
part
the
post”,
is
the
basic
rule

49.
AIDA
Europe
and
FERMA
would
like
to
thank
for
its
support

50. EMBARGO

51. RestricEons
on
insurance
within
embargo
measures
on
the
example
of
the
EU
Iran
Embargo
RegulaEon
Prof.
Dr.
Manfred
Wandt
AIDA
–
FERMA
Conference
2013
Paris
–
June
03,
2013

52.
Overview
• Which
applicable
laws
provide
for
restricEve
measures?
• What
is
the
content
of
the
applicable
laws?
• What
are
the
penalEes
applicable
to
infringements?
• What
are
the
legal
consequences
of
an
infringement
for
the
contract?
• Can
contractual
sancEon
clauses
be
helpful?
• How
to
avoid
infringements
in
daily
business?

53.
EU
Iran
Embargo
RegulaEon
Special
restricEons
on
insurance
related
to
• (Military)
goods
and
technology
• Iranian
crude
oil
or
petroleum
products
• Iranian
petrochemical
products
• Iranian
natural
gas
(15
October
2012).
• “to
provide,
directly
or
indirectly,
…
(re)insurance
related
to
the
import,
purchase
or
transport
of
…
products
of
Iranian
origin
or
that
have
been
imported
from
Iran”
Q
of
interpreta2on:
Does
insurance
mediaEon
is
a
kind
of
indirect
provision
of
insurance?
Does
hull
(re-­‐)insurance
for
means
of
transportaEon
is
prohibited?

54.
General
restricEon
on
insurance
Art.
35
para.
1
EU
Iran
RegulaEon
Prohibi2on
to
provide
(re-­‐)insurance
and
to
broker
the
provision
of
(re-­‐)insurance
to:
a)
Iran
or
its
Government,
and
its
public
bodies,
corporaEons
and
agencies;
b)
an
Iranian
person,
enEty
or
body
other
than
a
natural
person;
or
c)
a
natural
person
or
a
legal
person,
enEty
or
body
when
ac2ng
on
behalf
or
at
the
direc2on
of
a
legal
person,
enEty
or
body
referred
to
in
a)
or
b).
According
to
the
definiEon
in
Art.
1
lit.
o
(iv),
Iranian
person
also
means
any
legal
person,
enEty
or
body,
inside
or
outside
Iran,
owned
or
controlled
directly
or
indirectly
by
one
or
more
of
the
above
menEoned
persons
or
bodies.
Q
of
interpreta2on:
many
ques2ons!

55. Scope
of
applicaEon
Art.
49
EU
Iran
RegulaEon
This
RegulaEon
shall
apply:
(a) within
the
territory
of
the
Union;
(b) …
(c)
to
any
na2onal
of
a
Member
State
inside
or
outside
the
territory
of
the
Union;
(d)
to
any
legal
person,
enEty
or
body
inside
or
outside
the
territory
of
the
Union,
which
is
incorporated
or
cons2tuted
under
the
law
of
a
Member
State;
(e)
to
any
legal
person,
enEty
or
body
in
respect
of
any
business
done
in
whole
or
in
part
within
the
Union.
Q:
also
employees
of
the
insurer?
Q:
also
the
policyholder
in
the
case
of
insurance
for
the
account
of
an
insured?

56. PenalEes
applicable
to
infringements
• Penal2es:
according
to
naEonal
law
of
the
Member
States
(Art.
47;
„shall
be
effecEve,
proporEonate
and
dissuasive“)
• No
liability
for
– freezing
of
funds
etc.
carried
out
in
good
faith
on
the
basis
that
such
acEon
is
in
accordance
with
the
RegulaEon
(Art.
42
para.
1)
– infringement
of
the
RegulaEon
in
innocent
unawareness
of
the
prohibiEon
(Art.
42
par.
2)
– disclosure
of
informaEon
in
good
faith
under
the
RegulaEon
(Art.
42
para.
3)

57. Civil
law/conflict
of
laws
issues
DeterminaEon
of
the
applicable
naEonal
law
related
to
• Effec2veness
of
the
prohibited
legal
transac2on:
law
applicable
to
the
contract
(Rome
I
RegulaEon)
• Mandatory
rules
(of
public
interest),
Art.
9
Rome
I
RegulaEon:
– of
the
lex
fori
(including
EU
RegulaEon)
– of
the
state
of
performance
– of
the
law
applicable
to
the
contract
(→controversial)

58. Civil
law
AcEons
within
the
Union
EU
Embargo
Regula2on
is
applicable
as
a
mandatory
rule
Invalidity
of
the
insurance
contract
by
reason
of
infringement
of
law
according
to
the
law
applicable
to
the
contract
(e.g.
sec.
134,
138
of
the
German
Civil
Code).
In
German
law:
Legal
presumpEon
of
total
invalidity
of
the
contract,
sec.
139
German
Civil
Code

59. Civil
law
AcEons
outside
the
Union
Conflict-­‐of-­‐law
rules
of
third
country
(lex
fori)
decide
on
• the
law
applicable
to
the
contract,
and
• the
applicable
mandatory
rules.
Q
of
interpreta2on:
Choice
of
forum-­‐clause
and
choice
of
law-­‐clause
as
circumvenEon
in
the
sense
of
Art.
41
Iran
RegulaEon?

60. Contractual
sancEon
clause
• Large
number
of
different
wordings
within
the
market
• Contractual
risk
exclusion
(for
a
legally
uninsurable
risk)
• consEtuEve
not
only
declaraEve,
because
the
infringement
of
embargo
provisions
is
excluded
a
priori

61. Contractual
sancEon
clause
In
general
not
an
unfair
contract
term,
because:
• jusEfied
interest
of
the
insurer/broker
– to
avoid
penalEes
and
– to
avoid
the
total
invalidity
of
the
contract
• no
unreasonable
burden
on
policyholder

62. Contractual
sancEon
clause
but
unfair
and
void
if
the
clause
is
extended
to
foreign
law
which
is
in
contradicEon
to
EU-­‐/Member
State
law
(so-­‐called
blocking
statute)
Background:
the
US
have
applied
certain
embargo
provisions
extraterritorially
on
non
ciEzens
of
the
USA.
The
EU
has
responded
thereto
with
the
RegulaEon
EC
No.
2271/96
protecEng
against
the
effects
of
the
extra-­‐territorial
applicaEon
of
legislaEon
adopted
by
a
third
country,
and
acEons
based
thereon
or
resulEng
thereof

63. Contractual
sancEon
clause
Open
ques2on
whether
a
sancEon
clause
is
unfair/null
and
void
if:
• it
covers
third
countries
embargo
provisions,
• which
are
not
banned
by
a
blocking
statute,
• but
to
which
a
court
of
an
EU
Member
State
would
not
give
effect
due
to
conflict
of
law
rules?
Personal
opinion:
even
than
the
clause
is
fair
and
valid
if
there
is
tranperancy
by
specificaEon
of
concrete
acts
and
provisions

64.
Caveat
lector:
No
carte
blanche
with
respect
to
terms
and
condiEons
for
a
general
compliance
clause
on
the
basis
of
the
movo
„no
insurance
protecEon
for
infringement
of
law
within
the
territory
covered
by
the
contract“
Many
thanks
for
your
aven2on!

65. US
SancEons
–
AXA
Framework
1. US
sanc2ons
applicable
to
US
companies
and
other
companies
with
sufficient
US
nexus
2. US
sanc2ons
intended
to
punish
non-­‐US
companies
who
conduct
business
with
certain
sanc2oned
par2es
or
ac2vi2es
(especially
regarding
Iran)
3. US
public
disclosure
requirements
under
sec2on
219
of
ITRA
4. Sanc2ons
under
the
laws
of
individual
US
states
(eg
California,
Florida,
New
Jersey,
New
York)

66. 66
Sanc2ons
in
Insurance
Roundtable
(SIIR)
Preamble
The
SancEons
Compliance
in
Insurance
Roundtable
(SCIR)
is
a
voluntary
group
of
senior
compliance
professionals
from
insurance,
reinsurance
and
insurance
brokerage
companies
engaged
in
the
business
of
internaEonal
insurance.
Mission
SIIR's
mission
is
to
exchange
views
and
develop
non-­‐binding
guidance
on
best
pracEces
for
complying
with
internaEonal
economic
and
trade
sancEons
applicable
to
internaEonal
insurance.
In
addiEon,
SIIR
seeks
to
engage
in
dialogue
with
regulators
and
other
sancEons
authoriEes
to
ensure
that
internaEonal
sancEons
applicable
to
insurance
are
understood
and
workable.
Any
guidance
developed
by
SIIR
will
be
made
available
to
all
interested
parEes,
including
regulatory
authoriEes.
SIIR
parEcipants
are
commived
to
strict
adherence
to
applicable
compeEEon
laws.
SIIR
parEcipants
are
not
obliged
to
follow
any
guidance
developed
by
SIIR.
MeeEngs
SIIR
meets
at
least
quarterly
by
telephone
or
in
person.
Wriven
agendas
will
be
produced
outlining
topics
to
be
discussed.
ACE
AIG
Allianz
Aon
Marsh
Munich Re
SCOR
Swiss Re
Trans Re
Travelers
Willis
Zurich
§ Leading global commercial insurers, reinsurers and brokers have been meeting monthly for almost
two years to ensure a common approach to sanctions compliance
§ Participants:
§ Charter:
AXA
Hannover Re
ING
Lloyd’s

67. Iran
Sanc2ons
and
the
Insurance
Industry
–
Symposium
June
2013
Insurance
Industry
6
global
insurers
3
global
brokers
2
global
reinsurers
Lloyd’s
3
P&I
Clubs
IUMI
Sanctions – Government Sector
European Commission - External Action Service
UK HM Treasury
UK Foreign & Commonwealth Office
UN Panel of Experts on Iran
US OFAC
US State Department
Global Insurance Clients
British Airways
GE Capital
Maersk
Other Stakeholders
One international law firm
International Association of Insurance Supervisors
King’s College London

68.
AIDA
Europe
and
FERMA
would
like
to
thank
for
its
support

69. D
&
O

70. D&O liability insurance:
From broad coverage…
To forbidden guarantees ?

71. D&O
:
from
broad
coverage
to
forbidden
guarantees?
Mr Jorge ANGELL
Senior partner of LC Rodrigo Abogados Law firm,
Dr Otto CSURGO
Chairman & CEO of Pannonia Insurance Company,
Mr John CURRAN
Partner of DLA Piper,
Mr Emmanuel SILVESTRE
Vice President LIU: Underwriting Manager D&O/FI.
Panel presentation :

72. Summary :
Ø Introduction and brief reminders,
Ø D&O insurance & Civil Law boundaries,
Ø D&O insurance & Penal Law boundaries,
Ø D&O insurance & other possible restrictions,
D&O
:
from
broad
coverage
to
forbidden
guarantees?

73. Introduction and reminders
Ø Is Corporate indemnification allowed ?
Ø Is D&O insurance, as such, permitted ?
D&O
:
from
broad
coverage
to
forbidden
guarantees?

74. D&O insurance & Civil Law boundaries
Ø D&O wrongful intent :
«
objec+ve
»
vs
«
subjec+ve
»
definiEon,
D&O
:
from
broad
coverage
to
forbidden
guarantees?
Ø Warranty statement :
«
known
past
»
vs
«
severability
flexibility»,
Ø Non-rescindable policy : in
any
case
?

75. D&O insurance & Civil Law boundaries
Ø Predetermined allocation extension :
Applicable
to
anyone
and
to
any
wrongful
act
?
D&O
:
from
broad
coverage
to
forbidden
guarantees?
Ø Extended Reporting period:
«
temporary
cover
»
vs
«
compulsory
discovery
»
Ø Punitive damages

76. D&O insurance & Penal Law boundaries
Ø Defence costs reimbursement:
Contractual
possible
threat
or
mandatory
provision
?
D&O
:
from
broad
coverage
to
forbidden
guarantees?
Ø Bail or penal bonds payment:
Legal
and
efficient
coverage
?

77. D&O insurance & Penal Law boundaries
D&O
:
from
broad
coverage
to
forbidden
guarantees?
Ø Civil or administrative fines
Pro :
for
a
«
reasonable
»
cover
(as
soon
as
not
considered
as
wrongful
intent)
Cons
:
insurance
cover
prohibited
by
Law
ü Similar
to
penal
fines
(procedures,
Public
Order
purpose…)
ü Punishment
of
illegal
behaviour
(vs
damage
indemnificaEon)
ü Fine
paid
to
the
State
AuthoriEes
(vs
Third
party
suffering
any
damage)
Pending rules and first jurisdiction decisions

78. D&O insurance & other possible restrictions
D&O
:
from
broad
coverage
to
forbidden
guarantees?
Ø Government anti-indemnification policies,
Ø Captive involvement: great
care
to
be
taken,
Ø Premium level adequacy and conflict of
interest

79. D&O liability & Ransom payment status
D&O
:
from
broad
coverage
to
forbidden
guarantees?
Ø Employers safety duties reminder,
Ø Terrorism financing (direct/indirect)
infringement,
Ø Piracy : legality of ransom payment,
Ø Ransom payment to terrorist : pending
uncertainties and issues…

80. Thanks for your
attention
D&O
:
from
broad
coverage
to
forbidden
guarantees?
Any questions ?

81. CLOSING

82.
AIDA
Europe
and
FERMA
would
like
to
thank
for
its
support