O'Connors LLP Blog

Insurance for investor confidence

2012-02-21T16:34:00.007Z

Having the right risk retention and risk transfer strategy in place is critical to the security of a company's balance sheet. After all, very few businesses survive a major uninsured loss. Investors know this and the corporate analysts who advise them are paying growing attention to the quality of a company's insurers and the service providers who place and manage its program. Service providers typically include insurance brokers, third party claims administrators, captive managers, pension trustees and insurance consultants.

Increasingly, large insurance buyers are turning to independent insurance specialists to assist with the creation of effective service provider relationships. This trend is being driven by corporate governance and a genuine desire to achieve best value for money and service delivery from such providers.

General procurement advisers focus on cost alone which is a very blunt instrument for such a balance sheet sensitive issue. A specialist insurance procurement adviser, on the other hand, can bring genuine technical and tactical thinking to help deliver the right outcome, typically covering:

Benchmarking - conducting off-market benchmarking of service delivery and pricing (for organisations who need to stress test service provision for corporate governance purposes without open-market tendering);

Tendering - managing open-market competitive tenders (for those obligated or wishing to conduct a competitive procurement of services); and

Contracting - handling the variation, approval or drafting of insurance related service agreements (to ensure all agreed and necessary terms are properly codified in a binding contract).

O'Connors LLP has launched a service specifically aimed at large insurance buyers keen to achieve best practice in this area - details can be found at http://www.service-provider-reviews.co.uk/

A fresh approach to disputed insurance claims

2011-11-28T15:03:00.005Z

Are your company's insurers disputing what you believe to be a legitimate insurance claim? Do you fear years of protracted litigation and damage to your company's reputation and profile with the insurance markets? Are you frustrated that you don't seem to be getting the robust advice you feel you deserve from your advisers?

You are not alone.

Before you rush to appoint litigation lawyers to threaten court proceedings, a more constructive approach might be to ask a non-contentious commercial insurance lawyer to conduct a confidential and objective review of your claim and policy wordings and provide a strategic view of the merits of your case and the legal and tactical arguments to put to your insurers - usually via your insurance brokers.

We are increasingly being asked to do this (by insureds and their brokers) and the results can be quite astonishing. Naturally, we put our success down to our charm and good looks but it is far more likely due to:

Our ability to analyse claims from a 'Boardroom' perspective;
The fact that our insurance lawyers have worked in or as advisers to insurers and know how they think and react;
The lessons we have learnt from drafting policy wording for reinsurers, insurers, brokers, captives managers and companies;
Our use of clear thinking and technical know-how to identify points that will encourage insurers to compromise;
Our consideration of the various regulatory routes as a possible means of encouraging settlement;
Our ability to offer advice with the benefit of legal privilege and properly cater for any weak points in a claim;
Our ability to keep our advice brief, practical and (as far as any lawyer can) jargon and waffle-free.

It's a thought, anyway. Give us a call.

Legal contracts are the key to an effective insurance program

2011-11-10T09:10:00.003Z

The protection afforded to a company’s balance sheet when it transfers a risks to an insurer is totally dependent on contract certainty with regard to:

the contract it has with its insurer (insurance policy);
the contract it has with its insurance broker (terms of business agreement); and
the contracts it has with third party suppliers and customers (commercial agreements).

Insurance Policies - We come across many examples of insurance policies which do not respond to a claim because:

the insuring clauses do not properly reflect the risks;
they contain exclusions which the company was unaware of;
they contain conditions which are unreasonable and should never have been accepted;
they contain warranties the company has (unwittingly) failed to comply with; and
the limit of indemnity is inadequate.

Terms of Business Agreement (TOBA) - We come across many examples of TOBAs which contain terms unduly favourable to the insurance broker because:

the limit of liability does not reflect the true risk exposure of their client (i.e. offers limited recourse against the broker if things go wrong);
they contain KPIs which are unworkable and/or unenforceable;
they allow the broker to refuse to take responsibility for checking whether the policy wordings are fit for purpose, passing this to their client to check; and
the expiry of the TOBA coincides with the insurance program renewal date, making it very difficult to change broker.

Commercial Agreements - We come across many examples of commercial agreements which companies have entered into with third party suppliers and customers which contain indemnity and liability provisions that have not been cleared with their insurers and which:

compromise insurers rights of subrogation and so potentially render the indemnity under the insurance policy ineffective;
fail to secure the protection available under insurances purchased by other parties to such commercial agreements;
fail adequately to impose insuring obligations on other parties when it is appropriate to do so.

We would be interested in hearing from any companies with experience of such issues with a view to sharing knowledge and solutions.

O'Connors LLP launches new Blog

2011-11-08T16:35:00.000Z

Law firm O'Connors LLP has launched a new Blog to keep clients and contacts up to date with what is going on in the O'Connors world.

Watch this space!