June 15, 2015 marked the 800th Anniversary of the sealing of Magna Carta by King John in a field at Runnymeade in the United Kingdom. Scholars, lawyers, politicians and many others trace the rule of law back to Magna Carta. So what does the rule of law have to do with insurance and reinsurance disputes? In the United States, as well as the United Kingdom and many other countries that subscribe to the rule of law, personal injury cases, commercial disputes between insurance companies and their policyholders and commercial disputes between insurance and reinsurance companies are typically resolved in court, before arbitration panels or before mediators. All of these dispute resolution mechanisms follow legal procedures and are bound by the rule of law. Even though voluntary mediation and commercial arbitration are, for the most part, outside the judicial systems of most countries, these dispute resolution procedures are rooted in fundamental fairness and agreed-upon legal processes.
On June 15, 2015, my wife and I had the privilege of attending the 800th Anniversary of the sealing of Magna Carta at Runnymeade as part of the American Bar Association’s 800th Anniversary 2015 London Sessions program. The ceremony was impressive and inspiring. Among other dignitaries attending this celebration were HRH Queen Elizabeth, Prince Phillip, Prince William and Princess Anne. The Brits take Magna Carta seriously, as they should. David Cameron and Loretta Lynch both spoke. And William Hubbard, the current ABA President, eloquently described the ties between the United States and the United Kingdom through Magna Carta.
As part of the 2015 London Sessions, the ABA put on a wonderful program exploring all aspects of Magna Carta as well as traditional subjects like comparative cross-examination and litigating in the UK courts. I was also honored to have a panel on this special program on Adapting to an Ever-changing and Risky World of Tort Liability. On the panel, which I moderated, were Sean McGovern, Chief Risk Officer, General Counsel and a Director of Lloyd’s of London, Dr. Robert Hartwig, President of the Insurance Information Institute, Pete Thomas, Chief Risk Officer for Willis Re Global and Professor Jenny Steele from the University of York Law School.
While our panel was not directly tied to Magna Carta, the discussion of how the insurance industry adapted and changed in response to the explosion of tort liability and created a vibrant insurance marketplace to provide policyholders with coverage against this expanded liability all comes back to the rule of law. Tort liability is a legal concept, which exists because our society believes in the rule of law and the right of an injured person to receive just compensation where the injuries were caused by the negligence of another. Determining whether an insurance policy provides coverage is a legal issue that must be resolved by following the rule of law. And while custom and practice in the insurance or reinsurance industry carries more weight in arbitration than it might in court, resolution of contract interpretation and coverage nevertheless has its roots in the rule of law.
We discussed the expansion of tort liability and how the Lloyd’s market works and innovates to provide insurance products in traditional and emerging economies and has learned from its past experiences with a stronger emphasis on contract wording, data and underwriting discipline and analysis. We saw how the data on insurance premiums for liability risks as a percentage of gross national product compares across various economies. We learned how cyber is something that requires special attention and underwriting expertise and is not for the dabbler. And we focused on the concepts associated with negligence and tort liability.
And at the end of the day, resolving disputes over torts or insurance contracts all comes back to Magna Carta and the rule of law.