Lloyd’s held its latest 360 liability conference this week in Madrid. The event, hosted by Lloyd’s Chairman, Lord Levene, explored liability risk and its impact on Spanish business. Recent research revealed that business leaders are increasingly concerned by liability risks. Thirty-six percent of companies surveyed have faced a lawsuit brought by a customer in the last three years while 36% have experienced an employee lawsuit.
Businesses in Spain, in line with the rest of the world, are operating in a more challenging environment than ever. Stakeholder action is on the rise, and will no doubt be fuelled further by the current economic crisis, and across Europe there is fear that a US-style compensation culture will cross the Atlantic. Professor Neil Rickman, Director of the RAND Institute for Civil Justice, Europe and lecturer at the University of Surrey, said in his presentation that evidence from Europe suggests that we are not yet in the grip of a compensation culture, but that large-scale risks seem to be on the increase. He advised that business needs to adopt strategies to ensure that it is informed about the ever-changing legal environment. However, Judge Cesar Tejedor, said at the event that he feels that Spain is still some way behind the UK in terms of compensation culture.
Speaking on current liability risk in Spain, Juan Arsuaga, Managing Director of Lloyd's Iberia said that the most critical lines of liability in Spain at the moment are medical malpractice, professional liability, E&O, D&O and construction liability. He also feels that new environmental laws will start to have an impact in the near future.
At the event, Jeremy Adams of Novae Syndicates Limited examined how the sub-prime crisis in the US will result in insurance losses in Europe. He suggested that the initial fallout will come from errors and omissions insurance (E&O), which protects against claims resulting from negligence, errors or omissions, and directors and officers insurance (D&O), which covers management against legal costs and damages resulting from claims against them. He also suggested that the collapse of the housing market could lead to professional liability losses to solicitors and valuers and fraud losses, especially mortgage fraud.
Introducing the event, Lloyd’s Chairman Lord Levene said that Britain and Spain were at the forefront of countries suffering as a result of the current global economic crisis. “There is no doubt that the credit crunch is now having a wide impact on national economies. Not only are Britain and Spain no exception, but both of our countries seem to be on the list of those suffering most right now. The European Commission recently predicted that the UK, Spain and Germany will enter a technical recession by the end of the year. “
It is clear that the insurance industry can and should play a valuable role in helping business to understand and manage liability risk better, and events such as the one in Spain last week help both the insurance market and their clients on the subject of liability risk. Expert speakers such as Judge Cesar Tejedor and Neil Rickman can provide valuable insights into liability trends and help business leader prepare for the future.
