Insurance updates

Brazil

Contributed by CAL - Costa, Albino & Lasalvia Advogados
New guidelines a turning point for large-risks insurance market
  • Brazil
  • 01 June 2021

The National Council of Private Insurance recently published Resolution 407/2021, establishing new guidelines for large-risks insurance contracts. The resolution is a turning point for the Brazilian large-risks insurance market as it separates this type of product from mass insurance. Further, the new guidelines are a welcome development, particularly as they treat sophisticated parties as equally qualified players which are free to negotiate the terms of their contract.

Insurance-linked securities – a welcome development
  • Brazil
  • 09 March 2021

The National Council for Private Insurance recently issued a resolution which introduces into the Brazilian market special purpose local reinsurers (SPLRs) and insurance-linked securities, to be issued by SPLRs. The resolution is a welcome example of efforts by the Brazilian market to create an environment which fosters innovation, by seeking to expand its financial capacity and creating new mechanisms to transfer risks, ultimately bridging the gap between the capital and insurance markets.

Welcome changes to large-risks sector
  • Brazil
  • 10 November 2020

In a welcome move to distinguish large risks from 'seguros massificados' (ie, mass insurance), the Superintendence of Private Insurance has proposed changes to the regulation of large risks through the issuance of the Draft Resolution for Public Consultation 18/2020. The draft resolution represents an important potential turning point in the Brazilian insurance and reinsurance landscape, correcting an imbalance in favour of policyholders, at least to some degree.

Regulatory changes for reinsurers
  • Brazil
  • 08 September 2020

The National Council for Private Insurance – the Brazilian entity in charge of drawing up the country's reinsurance industry policies – recently introduced a series of changes to the regulatory landscape. Such changes aim to enforce the wider liberal agenda set out by the Ministry of the Economy and underline the federal government's commitment to a more liberalised economy.

Weak Brazilian real makes now a good time to settle Brazilian insurance and reinsurance claims
  • Brazil
  • 18 August 2020

The Brazilian real has devalued by more than 30% against the US dollar in 2020, making now an attractive time for Brazilian cedants supported by international reinsurers operating in US dollars to settle their claims. One of the salient features of Brazilian insurance claims is the accrual of significant levels of interest and monetary correction (ie, inflation-linked interest), which has the capacity to increase quantum at an alarming rate.


Canada

Contributed by Theall Group LLP
'Additional insured' coverage and multiple insurers: duty to defend and allocation of defence costs
  • Canada
  • 08 June 2021

Insureds which suffer a loss may find that they are covered by multiple insurance policies for that loss. Such situations can arise inadvertently, or the existence of multiple overlapping policies may be by design. A number of issues may arise with the duty to defend, where there are overlapping or concurrent insurance policies. This article focuses on the duty to defend and how the courts allocate defence costs.

'Additional insured' coverage and multiple insurers: 'other insurance' clauses
  • Canada
  • 01 June 2021

Insureds which suffer a loss may find that they are covered by multiple insurance policies for that loss. Such situations can arise inadvertently, or the existence of multiple overlapping policies may be by design. A number of issues may arise with the duty to defend, where there are overlapping or concurrent insurance policies. This article focuses on how courts resolve overlapping coverage where there is one or more 'other insurance' clauses.

'Additional insured' coverage and multiple insurers: resolving overlapping coverage disputes
  • Canada
  • 25 May 2021

Insureds which suffer a loss may find that they are covered by multiple insurance policies for that loss. Such situations can arise inadvertently, or the existence of multiple overlapping policies may be by design. A number of issues may arise with the duty to defend, where there are overlapping or concurrent insurance policies – for example, how courts resolve overlapping or concurrent coverage absent a clause in one or more of the policies that deals with the issue.

'Additional insured' coverage and multiple insurers: overlapping and common defence coverage
  • Canada
  • 18 May 2021

Insureds which suffer a loss may find that they are covered by multiple insurance policies for that loss. Such situations can arise inadvertently, or the existence of multiple overlapping policies may be by design. A number of issues may arise with the duty to defend, where there are overlapping or concurrent insurance policies. This article focuses on identifying situations of overlapping or concurrent coverage.

Ontario court to insurers: give me clarity, or save your breath!
  • Canada
  • 11 May 2021

Timely reporting to the insurer is essential for liability insurance policies structured on a claims-made basis. Coverage can be lost if a policy renewal intercedes between knowledge of a potential claim and before the insurer is notified. While that result can be justified in some circumstances, a recent decision from the Ontario Superior Court of Justice helpfully confirms that the policy had better be clear for the insurer to take that position.


Cayman Islands

Contributed by Ogier
New opportunities for blockchain use in insurance industry
  • Cayman Islands
  • 21 January 2020

It has been more than a decade since blockchain – or distributed ledger technology – appeared on the financial services landscape. Yet, it is still capable of generating excitement as its value in transforming processes continues to develop. As blockchain increases its reach and its impact in specific industries grows, this will generate a need for suitable models of insurance. Cayman-based technology companies have expressed interest in buying insurance from local insurers.


China

Contributed by AnJie Law Firm
Applicants must disclose facts when prompted by insurers to avoid rescission
  • China
  • 13 April 2021

When concluding insurance contracts, applicants have a duty of disclosure. However, applicants need not disclose information unless the insurer enquires. Insurers' remedy for breach of this duty varies. They can either rescind the contract and keep the premium or rescind the contract but return the premium. However, insurers have no right to rescind the contract if they underwrote it fully aware that the applicant had not provided honest answers.

WFOE shopping: how do Beijing, Shanghai and Shenzhen compare for establishing an insurance WFOE in China?
  • China
  • 15 September 2020

Foreign insurers cannot directly sell insurance products in China unless they have successfully established a joint venture or wholly foreign-owned enterprise (WFOE) insurer in mainland China. In light of Shenzhen's recent pilots and reforms, it is now the most favourable destination for foreign insurers seeking to establish a WFOE in mainland China.

China, GATS, Trump: do non-US insurers get a piece of the US-China trade deal?
  • China
  • 11 August 2020

Despite the tortuous path ahead for the US election campaigns and the trials and tribulations of 2020, the US-China Phase One Trade Deal remains in place. As China begins to further open its financial market, foreign insurance institutions (FIIs) may be wondering whether non-US FIIs have any chance of benefiting from China's treatment of US insurers. If only US insurers benefit, would that be a Global Agreement on Trade in Services (GATS) violation or would it be GATS compliant?

Why business interruption insurance covers only losses resulting from damage to property
  • China
  • 28 July 2020

The rapid spread of the COVID-19 pandemic has affected business operations worldwide. For many companies, business interruption (BI) as a result of the pandemic is one of the greatest operational risks of 2020. Although many companies are insured against BI, their coverage may not extend as far as they believe. For example, compensation under a BI policy is often based on the condition that damage to property has occurred. This article sheds some light on this rule.

Can foreign investors capitalise on insurtech's growth in China?
  • China
  • 30 June 2020

It is no secret that China's insurance industry presents good upside growth opportunities and China's insurtech market continues to grow rapidly. Foreign insurers are currently underrepresented in this market, even as former market barriers to entry continue to fall. This market presents great potential for foreign insurers, and Western insurers in particular have centuries of experience to share with their Chinese counterparts.


Denmark

Contributed by WSCO Advokatpartnerselskab
Construction all risks insurance – challenges with LEG3 coverage
  • Denmark
  • 25 May 2021

In Denmark, construction all risks insurance covers damage in connection with a construction. It is an 'all risk' insurance, which means that most damage is covered unless directly excluded in the insurance terms. However, primary damage is not generally covered. As several players in the construction industry demanded coverage of primary damage, the London Engineering Group (LEG) introduced the so-called 'LEG3/96' coverage. This article examines challenges associated with LEG3 coverage in Denmark.

Does the EU directive regarding 'large risks' include vessels bought for private use?
  • Denmark
  • 23 February 2021

In two previous verdicts a district court found that prorogation of jurisdiction can be validly agreed in a yacht insurance contract, even where consumer interests are concerned and the contract requires that legal proceedings be brought in a court in the insurer's home country. In a recent decision, a high court found that the European Court of Justice (ECJ) should be asked for a preliminary ruling. The question for the ECJ is does the EU directive regarding 'large risks' include vessels bought for private use?

Recharge of sum insured: whose duty and what are the consequences of failing to do so?
  • Denmark
  • 06 October 2020

In a recent ruling on the recharge of the sum insured in a project liability insurance policy, the Danish Building and Construction Arbitration Board ruled that the obligation to recharge was incumbent on the policyholder (adviser), regardless of whether the client had requested it or not. This article examines the ruling and highlights the conditions that parties should be aware of when refilling.

What should companies do if they have claims against a bankrupt tortfeasor?
  • Denmark
  • 18 August 2020

This article provides options for companies which have a claim against a bankrupt tortfeasor and discusses Section 95 of the Insurance Contracts Act, which gives creditors the right to raise a claim directly against a tortfeasor's insurer. However, this right is forfeited if the applicable deadlines are not met.

Putting out fires: hot work and insurance coverage for fire damage
  • Denmark
  • 30 June 2020

The execution of 'hot work' (ie, work which carries the risk of fire) often results in fires. Therefore, anyone who executes or arranges for the execution of hot work should be aware of how damages and possible liability for damages can be avoided. Hot work insurance policies should also be thoroughly examined. This article highlights the rules that craftspeople, contractors and clients must consider before and during the execution of hot work, as well as the associated liability issues.