Posts Tagged ‘legal developments’



May 29th, 2014

Europe Embraces Annuity Settlements for Bodily Injury

Posted at 1:00 AM ET

Here we review GC Capital Ideas entries highlighting Europe’s embrace of periodic payment orders over traditional lump sum payments for the settlement of bodily injury claims.

Time Off for Certain Behavior: The Courts Act of 2003 fundamentally changed the way that catastrophic injury claims are settled by insurers. It gave the courts the power to enforce a periodic payment order (PPO) as compensation instead of an upfront lump sum payment. A PPO is an annuity payment from the insurer to the claimant, and is designed to cover ongoing care costs, loss of earnings and other expenses associated with the injuries sustained for the rest of the claimant’s lifetime.

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Chart: Prevalence of Annuity Settlements in Europe: For bodily injury claim settlements in Europe, the trend is shifting away from lump sums and towards annuity-type settlements, which come with risks related to longevity, inflation and hedging.

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April 23rd, 2014

Periodic Payment Orders

Posted at 1:00 AM ET

Here we bring together the GC Capital Ideas two part series on periodic payment orders authored by Victoria Jenkins: 

Time Off for Certain Behavior, Part I: Behavioral economics is a fascinating field and one which actuaries should be aware of in their everyday work. It is the study of inherent biases in human decision-making. Many examples of these biases have been cited in connection with the financial crisis, and increasingly the implications for insurance are being examined.

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Time Off for Certain Behavior, Part II: Our experience in doing this has led to an “actuarial hunch” that PPO claims converted to their Ogden equivalents are not from the same underlying statistical distribution as traditional lump sum values. Fitting severity distributions to these claims in among the traditional lump sums can feel a bit like fitting to “apples and oranges.”

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March 18th, 2014

Time Off for Certain Behavior, Part I

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victoria-jenkinsVictoria Jenkins, Managing Director

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Behavioral economics is a fascinating field and one which actuaries should be aware of in their everyday work. It is the study of inherent biases in human decision-making. Many examples of these biases have been cited in connection with the financial crisis, and increasingly the implications for insurance are being examined. In a speech entitled ‘The Human Face of Regulation’ in April 2013, Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), explained how the FCA is going to use the principles of behavioral economics in the protection of the consumer (see www.fca.org.uk/news/speeches/human-face-of-regulation).

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October 21st, 2013

When Contract Certainty Isn’t So Certain

Posted at 1:00 AM ET

Richard Banyard, Senior Vice President, Lance Finley, Managing Director, Jane Furnas, Senior Vice President and Scott VanKoughnett, Senior Vice President

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Insurance policies are carefully drafted to outline coverage that is needed by policyholders while also specifying those areas where coverage is not expected to apply - the goal is to provide contract certainty, not in the usual sense of timeliness of contract signing, but from the perspective of specific policy language.  Sometimes, however, contract certainty is not so certain.  Recent examples have shown that insurers are increasingly facing reinterpretations of their policies by the judicial system, regulators, politicians and even the public via social media, all exerting pressure on insurers to provide coverage not previously anticipated by the drafters and underwriters of those policies.  As these claims are presented to the reinsurance market, pressure is also put on reinsurers to provide coverage that they may not have originally contemplated.  Insurers need to know that their reinsurers partner with them in such situations, and that reinsurance contracts provide appropriate flexibility to help ensure the reinsurers’ promise to pay.  The comments made in this article are intended solely to foster discussion on this topic.

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May 16th, 2013

New Guidelines for Managing Product Recalls and other Corrective Actions in Belgium

Posted at 1:00 AM ET

Many of the products people use every day are made in foreign countries - from coffee makers produced in China to cars built in Germany to cell phones manufactured in India. While many of these products fulfill their purpose without any complications, there are others that cause problems for their users. A coffee maker might spill boiling water or a car’s airbag might not open properly. These problems can be caused by manufacturing errors or flaws in product design.

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April 23rd, 2013

Italian Court Decision Encourages Strict Compliance with Industrial Safety Regulations

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On December 12, 2007, there was a fire in an industrial plant in Turin that was owned and managed by ThyssenKrupp Acciai Speciali Terni S.p.a. (ThyssenKrupp), an Italian subsidiary of ThyssenKrupp Stainless group. The violent fire occurred in a cold annealing and pickling line, called APL5, where there is typically a significant amount of lubricant oil and paper, as well as sparks generated by the plant’s industrial process.

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March 14th, 2013

Poland: Stricter Rules in Establishing Due Compensation in Vehicle Holders Insurance Market

Posted at 1:00 AM ET

According to many insured car holders in Poland, insurers have been underestimating compensation for losses, and the majority of auto insurance cases in Poland have been settled for amounts far below the actual costs of restitution. The most frequent reason is that the value of a loss has been determined based on the prices of used spare parts rather than new ones.

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March 11th, 2013

Germany: Breach of Contractual Incidental Obligation Due to Gross Negligence Can Release Insurer from Obligation to Pay

Posted at 1:00 AM ET

The Insurance Contract Act (Versicherungsvertragsgesetz, VVG) contains provisions about risk exclusions and incidental obligations. A risk exclusion means the insurer does not provide insurance cover for a specified excluded risk, and in cases of an incidental obligation, the policyholder loses insurance cover if he/she does not observe the specified incidental obligation.

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February 27th, 2013

Casualty Lines

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Here we highlight recent GC Capital Ideas stories that have focused on casualty lines of business. 

Contingent Business Interruption: Life Support for Industry: Traditional insurance products are insufficient to address these increasingly complex challenges. The standard business interruption policy only indemnifies an insured for a reduction in revenue following damage at its own premises. Contingent business interruption is a generic term for extensions to the standard cover that provide for reduction in revenue as a result of damage at locations other than the insured’s own premises, whether it be suppliers or customers. In some cases insurers are providing cover on a “non-damage” basis, which protects against insolvency or political risk among an array of contingencies that might disturb the supply chain.

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Criminal Liability of Companies Under Spanish Law: What is the Real Impact on Directors & Officers Coverage? The financial crisis has triggered a number of criminal investigations against companies and their directors. In light of these developments, this section provides an overview of the recently introduced Spanish regulation concerning criminal liability of companies and the real impact this reform will have on directors and officers policies.

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Swiss Supreme Court: Scope of Ban on Retroactive Insurance: The current Swiss Insurance Contract Act (Versicherungsvertragsgesetz, VVG) prohibits retroactive insurance. Therefore, an insurance contract is usually void if the risk no longer exists or the feared event has already occurred before the contract is concluded (Article 9 VVG).

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January 31st, 2013

Criminal Liability of Companies Under Spanish Law: What is the Real Impact on Directors & Officers Coverage?

Posted at 1:00 AM ET

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The financial crisis has triggered a number of criminal investigations against companies and their directors. In light of these developments, this section provides an overview of the recently introduced Spanish regulation concerning criminal liability of companies and the real impact this reform will have on directors and officers (D&O) policies.

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