David Lewin, Managing Director
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This latest issue of our legal update continues to expand our coverage of key legislative and judicial developments in Continental Europe. A variety of developments in insurance legislation are charted in this latest issue, from the introduction of mandatory self-insured deductibles in D&O liability insurance in Germany to the introduction of rights of direct access against liability insurers in Switzerland.

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David Lewin, Managing Director
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The Legal Situation

The Swiss Insurance Contract Act, dated April 2, 1908 (Versicherungsvertragsgesetz — VVG; SR 221.229.1), governs the contractual relationship between policyholders and insurers. The VVG proved its worth for many years, but over the last decade it has come under criticism. As a result, a partial revision of the VVG was made and entered into force on January 1, 2006, with the goal of strengthening the position of the policyholder. The Insurance Supervising Act (Versicherungsaufsichtsgesetz — VAG) and the attendant Supervising Regulation (Aufsichtsverordnung — AVO) have also been revised.

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David Lewin, Managing Director
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General Principles

Damages to individuals who have suffered personal injury are regulated by the Tort Liability Act (Skadeståndslagen). Compensation is payable for costs, loss of income, pain and suffering, disfigurement, and other permanent conditions. The overall guiding principle is that an injured person shall be compensated fully for his or her loss.

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David Lewin, Managing Director
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By a recent judgment, the Swedish Supreme Court overturned a longstanding insurance practice regarding the concurrent causes of loss of income.

Facts

A woman was severely injured in a traffic accident in 1992, and she lost her capacity to work completely. She was compensated i.a. for loss of income from the Motor Third-Party Liability Insurance (Trafikförsäkringen). In 2000, the woman had a cardiac arrest, resulting in additional severe injuries, which were sufficient to cause the loss of her ability to work. Both parties agreed that there was no causal link between the traffic accident in 1992 and the cardiac arrest in 2000.

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David Lewin, Managing Director
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In the previous issue of Recent Legislative and Judicial Developments in Continental Europe Affecting the Casualty Insurance Industry (Fall 2008), we dealt with the punitive interest that insurers must pay if a delay in settling claims is unjustified. At the time, we said that the Supreme Court had fixed certain guidelines for ascertaining when an insurer’s delay may be deemed justified. Since then, the Supreme Court has had the chance to address the issue on various occasions, the last in April 2009, and the guidelines may now be regarded as consistent doctrine.

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David Lewin, Managing Director
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For a claimant to successfully file a claim under Norwegian law, three cumulative criteria must be fulfilled:

• Basis of liability
• Causation
• Economic loss

Overview

Basis of Liability

For liability to be established under Norwegian law, it must be shown that the injuring party acted negligently (culpa). Either an act or the omission of performing an act may form the basis for liability, and whether either can be regarded as negligent must be evaluated based upon the prevailing facts. The injuring party will be liable if the actions or lack of actions by the injuring party are of a lower standard than objectively is to be expected by the bonus pater familias under similar conditions.

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David Lewin, Managing Director
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In January 2006, the new Dutch insurance law came into effect. Even though the stipulations contained in it are relatively recent, the Dutch government is already contemplating a new article on the period of limitation. In July 2008, a legislative proposal concerning the procedures for extrajudicial settlement of personal injury and untimely death claims was submitted to the House of Representatives. This proposal is now under debate in the Senate, and it is expected to pass in the near future.

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David Lewin, Managing Director
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Formerly, D&O insurance seldom included deductibles borne personally by the members of a company’s Management Board (Vorstand). The Act on the Adequacy of Management Board Compensation (Gesetz zur Angemessenheit der Vorstandsvergütung — “VorstAG”), adopted on June 18, 2009 by the German Parliament, now makes this mandatory.¹

The Legal Situation

VorstAG modifies the legal regime governing the compensation of members of the Management Board of German stock corporations and introduces a mandatory deductible for D&O insurance policies.

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David Lewin, Managing Director
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In a decision dated December 2, 2008, (ITM Enterprises et al v. Prodim et al), the Commercial Division of France’s Supreme Court, the Cour de cassation, ruled that, although an arbitral award is not binding on third parties and does not bar a subsequent lawsuit against them, the findings made in the award are effective against them. This ruling could impact both insurers and reinsurers.

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David Lewin, Managing Director
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Legislation consisting of five directives on motor insurance that was adopted by the European Community (EC) is widely perceived as a major contribution to the free movement of vehicles (and thus individuals and goods) within the European Union. The first three directives, adopted between 1972 and 1990, established a single market in the field of motor insurance and required all motor vehicles to be covered by third-party liability insurance. Moreover, the directives abolished the inspections previously conducted at EU internal border points to verify civil liability insurance for motor vehicles. The fourth of the five Motor Insurance Directives adopted by the European Parliament (Parliament) and Council of the European Union (Council) in 2000 focused on “visiting victims,” i.e., people who have had accidents outside their EU Member States of residence. The directive streamlined claim and compensation procedures and provided for the quicker settlement of claims. The latest Motor Insurance Directive in 2005 modernized the provisions contained in the previous directives on motor insurance and took steps to further protect victims.

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