The global financial crisis has resulted in increased professional indemnity and directors' and officers' claims in the United States.
Industry reports suggest that professional indemnity and directors' and officers' claims (PIDO claims) have increased in the United States in recent times following the global credit crunch1. Other jurisdictions appear to be (for now) comparatively unaffected in comparison. It is, however, conceivable that PIDO claims will increase in Southeast Asia arising out of negligent professional advice, claims against auditors and claims brought by shareholders seeking compensation for lending and borrowing policies which resulted in massive company losses.
Whilst the US experience has not translated to similar litigation in Southeast Asia, it is reasonable to expect that US claims will be a litmus test for recoveries elsewhere around the world against corporates and/or their insurers. Moreover, an increase in insurance claims is unlikely to be limited to just PIDO claims. Whilst many law firms expected exponential growth in litigation due to the credit crunch, the anecdotal evidence suggests that whilst litigation has increased, the bulk of the claims may still be lurking. It is understandable that companies already cash-strapped during the credit crunch, shelved litigation until their own financial viability was secured.
Were there lessons to be learned from the GFC for your company and was/is the company adequately prepared to face litigation? Part of this evaluation process should include a review of the company's insurance position in consideration of (a) its potential exposure to claims post-GFC; and (b) what the company's future business may require going forward.
What should your company be doing?
In the aftermath of the GFC and increasing signs of financial recovery, especially in Asia, companies should be re-evaluating risk management and investment protection strategies across the board as they look to the future. Whilst insurance brokers are best placed to advise on specific products that will suit your business, part of a company's risk management and investment protection program can be augmented by having lawyers review your insurance position which can include an audit of existing policies and risk management procedures.
What can we offer you?
Our lawyers have a wealth of experience advising international corporations on insurance issues. We aim to help our clients protect their investments and manage risk. Our Singapore office is offering, on a no obligation basis, a free consultation to discuss your company's insurance issues and any related policy issues you might have. This offer is limited to existing corporate clients of the firm.
Please click here to view our London e-bulletin entitled Madoff/Stanford declarations to insurers – be on your guard which you may find of interest.