Download PDF version - Munich Re
Download PDF version - Munich Re
Download PDF version - Munich Re
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
<strong>Munich</strong> <strong>Re</strong><br />
started to establish itself at the<br />
beginning of the nineties, initially in<br />
England, France, Holland, Italy and<br />
Scandinavia.<br />
In the USA, D&O insurance has<br />
been common since the beginning<br />
of the seventies. Today it is taken<br />
for granted that companies will<br />
conclude such insurance for<br />
persons entrusted with directorial<br />
and managerial duties.<br />
The most frequently used policies<br />
cover the individual liability of all<br />
the company’s directors and<br />
officers and also the company<br />
itself insofar as it is legally or<br />
contractually obliged to hold these<br />
persons harmless. Only losses<br />
arising from evident or objectively<br />
determinable wrongful acts are<br />
insured, not the entrepreneurial risk<br />
as such, although in individual<br />
cases it can be very difficult to<br />
make a clear distinction. D&O<br />
policies provide indemnification<br />
both for actual claims for damages<br />
and for legal costs. With litigation<br />
often dragging on for many years,<br />
it is not unusual for legal costs to<br />
be much higher than the damages<br />
themselves.<br />
The sometimes very long<br />
settlement periods result from<br />
the fact that D&O claims usually<br />
involve the interaction of complicated<br />
legal and economic<br />
elements and that the claims<br />
often relate to decisions dating<br />
back many years. This makes the<br />
reconstruction of events difficult<br />
and gives much scope for expert<br />
evidence and counter-evidence,<br />
often stretching courts to the<br />
limit in terms of both technical<br />
understanding and the demands<br />
made on their time.<br />
D&O insurance is certainly a very<br />
complex product, requiring<br />
extensive legal, business and<br />
underwriting expertise on the part<br />
of the insurer. Precise knowledge<br />
of the greatly varying legal<br />
environments from country to<br />
country, the ongoing monitoring<br />
of all events and data that are<br />
economically relevant for the<br />
insured, the calculation of<br />
appropriate prices and conditions<br />
for the insurance of the risk, and<br />
professional claims management –<br />
all these are essential for success<br />
in this attractive but exposed<br />
market segment. Also important is<br />
adequate reinsurance cover.<br />
The <strong>Munich</strong> <strong>Re</strong> has extensive<br />
experience with this form of<br />
insurance and not only in the USA,<br />
easily the most important D&O<br />
market. Our experts are ready to<br />
provide tailor-made reinsurance<br />
cover for insurers who want to take<br />
up or expand this interesting and<br />
difficult line of business. We can<br />
also offer comprehensive service<br />
for the design of policies, the rating<br />
of risks and the wording of<br />
insurance conditions.<br />
49<br />
Electronic communication in<br />
reinsurance<br />
Electronic communication is<br />
essential for companies to remain<br />
competitive nowadays. In<br />
reinsurance it has been a fact of<br />
life for a considerable number of<br />
years. Electronic communication<br />
increases the speed of processing<br />
business, streamlines business<br />
procedures and thus helps reduce<br />
costs. A distinction can be made<br />
between two basic types:<br />
E-mail makes it possible for<br />
individual correspondence to be<br />
sent in electronic form from one<br />
workstation to another. These<br />
workstations need not be within the<br />
same company: messages can<br />
be swiftly exchanged with staff at<br />
group or client companies as well<br />
as with in-house staff.<br />
Electronic data interchange (EDI)<br />
involves the largely automatic<br />
transmission of data in standard<br />
formats between the communication<br />
partners’ computer systems.<br />
This requires special preparations<br />
in addition to the PC, software,<br />
modem and telephone connection<br />
basically sufficient for electronic<br />
correspondence: sender and<br />
receiver have to agree on the<br />
structure and format of the data to<br />
be transmitted. The realization that<br />
individual agreements for this with<br />
each reinsurance client would<br />
mean an inordinate amount of work<br />
and expense led, back in 1987, to<br />
the formation of the <strong>Re</strong>insurance<br />
and Insurance Network – RINET for<br />
short – an initiative of several major<br />
reinsurers, in which the <strong>Munich</strong> <strong>Re</strong><br />
played a leading part. RINET has<br />
developed standards precisely<br />
defining the data fields and the<br />
codes for the different types of<br />
message, e.g. for the exchange of<br />
accounting or claims data. This<br />
means both sender and receiver<br />
each require only a single interface<br />
to their internal systems. Via this