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08 May 2012
On January 10 2012 the Court of Milan (XII Division) ruled on various legal issues affecting professional indemnity (PI) insurance policies, including claims-made rules and prior knowledge/non-disclosure issues.
A former statutory auditor of a company which had been declared bankrupt was found jointly and severally liable, together with the other former statutory auditors and directors, for failure to exercise control over the management of the company in respect of a multimillion-euro claim brought by the receiver.
The statutory auditor concerned had timely notified its insurer of the above claim and sought the relevant indemnification under its PI policy. However, the insurer denied coverage based on the following main arguments:
The court ruled in favour of the insured, stating that:
However, the court rejected the claim for damages brought by the insured against the insurer. This claim was based on the argument that the insurer had mismanaged the claim by preventing the insured, due to the above denial of coverage, from entering into a favourable settlement agreement with the receiver before the final decision - an agreement which would have enabled him to avoid the subsequent attachment proceedings against his properties.
According to the court, the insured failed to provide evidence of the actual availability of the receiver to enter into such a settlement agreement, and therefore rejected the claim for damages.
For further information on this topic please contact David Marino or Marco Dimola at DLA Piper Italy by telephone (+39 02 80 61 81), fax (+39 02 80 61 82 01) or email (firstname.lastname@example.org or email@example.com).
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