The balance between prevention and insurance.

Liability
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In the field of liability you always have to strike a balance between the risk that the organisation itself accepts and covers bij appropriate conduct, and the risk that has to be or can be transferred to third parties. It’s equally important to organize a cover for the risk that is appropriate to the liability issue.

 

Raetsheren’s approach, of always first gaining a deep knowledge of the risk the organisation runs, the market and the ambitions of organisations, ultimately brings big advantages in this respect. Not only from the perspective of awareness and how you go about things, but also with regard to costs. Striking the right balance between prevention and insurance – that is our contribution.

Board members’ liability

Over recent decades, there have been changes in the laws and regulations, and in the thinking about governance. The result has been that liability has increasingly come to lie with directors and supervisors of organisations. Add to these increasing internationalisation, media attention and growing claim-awareness among shareholders and stakeholders, developments in the law and awareness among curators, and board members’ liability has become a fundamental risk for board members and supervisors, whose private assets may be at stake.

The risk can be insured against, offering broad coverage which might, for example, also cover legal costs. However, the issue is that such insurance might affect the conduct of board members, who could interpret the fact of being insured as giving them excessive freedom of action in business (the ‘moral hazard’). The balance between insurance and personal responsibility is unique in each situation, and needs to be manifested in the form of a carefully considered solution.

Raetsheren is highly specialised in this subject matter. On the one hand, we know the markets in which our clients operate; on the other hand, we know the possibilities of the solutions and constellations on offer, and have years of experience in the subject. Liability insurance for board members is such bespoke work that we always start by getting personally acquainted. To do this, please feel free to contact us.

Environmental liability

The damage to the environment caused by companies and organisations is drawing increasing attention in legislation and regulations. And rightly, of course: it can involve very serious damage to, for example, protected flora, fauna or natural environments due to contamination of soil or water. On the other hand, personal injury and damage to third-party property can also occur.

The European Environmental Liability Directive (ELD), introduced in 2004, distinguishes between risk-related liability and culpable responsibility. In the various European countries, there are quite some differences of understanding in the implementation of the ELD. In the Netherlands, for example, only the mandatory part of it has been introduced because our national environmental legislation is deemed to cover the other aspects.

It practice, it is found that few parties (whether in the private or public sectors) are aware of the full implications of the ELD. In so many words, it states that the polluter pays – and pays everything. Direct damage and consequential loss, such as the cost of cleaning, decontamination and recovering. Your own damage, and that of third parties. Additionally, because of the ELD, an organization can be held responsible for damage to the biodiversity.

Now that the differences in implementation are proving to be so great, the European Union is considering imposing a mandatory nature on the insurance, including a duty of acceptance on the part of the insurance companies. The latter element is encountering resistance because that would take away the stimulus to prevent damage by means of effective measures. At the same time, of course, the costs of such insurance depend on the measures taken.

All in all, environmental liability is a specialised subject that calls for expert guidance. At Raetsheren, we have brought that specialisation under a separate department, which learns more with each new client and case. Accordingly, it can constantly improve its service to the clients.

Cyber-risks

The digital age brings many benefits, but it also brings risks. These ‘cyber-risks’ can have far-reaching consequences. It is not just about the financial consequences, but also about the security, reputation and even the continuity of your organisation; it can affect its services and even your customers.

Most companies are now heavily dependent on ICT (including that of suppliers and customers), data and reliable (internet) connections for their business processes. You are probably well familiar with the normal risks to which your ICT is exposed, such as fire, explosion, induction, power cuts or material damage to computers, and have undoubtedly taken preventive measures or insured against them. Cyber-risk, however, is increasing: financial loss incurred by an organisation, directly or indirectly due to ICT systems, without material damage being involved.

The new Data Leaks (Duty of Notification) Act came into force on 1 January 2016. Organisations that fail to fulfil this duty of notification may be confronted with an administrative fine imposed by the Personal Data Protection Board. In addition, the European Commission is working on new data protection rules, which are expected to come into force in 2018. This European Privacy Regulation will oblige you to give your data maximum protection. Failure to conform to these laws and regulations can result in substantial fines. As well as a duty of notification, the regulations also give guidelines for the quality of the measures to be taken in response to a cyber-incident. Good preparation is therefore essential.

Apart from any fine imposed, cyber-risks can also cause direct financial loss due, for example, to business interruption, loss of data, legal expenses, forensic investigation, and blackmail through hijacking of your systems. Indirect financial loss can also arise from a cyber-incident if it causes loss by a third party and the latter holds you liable for (for example) breach of privacy, misuse of personal data, damage to systems or infringement of intellectual property.

For more information, contact one of our specialists: Imco Struiksma or Peter de Koning on +31 (0)72 5414151.