Liability Insurance Get a better deal

1. Liability Insurance Get a better deal

2. Personal Introduction My name is John Dodd I have been involved in the insurance of the leisure marine industry since 1974 I claim to have invented the concept of package deal insurance for the industry on a ferry to Sweden in 1978 This format has since been adopted by most marine insurance outlets! Denovo Underwriting Agencies Ltd Tel 01590 670055

3. Market Introduction By way of setting the scene I’d like to start by talking about the insurance market as it is and how it got into it’s current state Denovo Underwriting Agencies Ltd Tel 01590 670055

4. Market State A Euro “think tank” reported during January that the European Insurance industry posted net losses of £400 billion in the last 5 years Denovo Underwriting Agencies Ltd Tel 01590 670055

5. Market State • FINANCIALS • 9.11 has an estimated cost of $80 billion • UK Property insurance has lost £4.5 billion net since 1993 • Commercial claims Q1-2002 were >100% higher than Q1-2001 • Share values have fallen by 45% • Interest rates have been at 50 year lows • Independent & other insurers have collapsed Denovo Underwriting Agencies Ltd Tel 01590 670055

6. Market State... ATTITUDE TO LIABILITIES • The UK legal system is adversarial we have relied on that for validation of claims or if you prefer a way to deny the validity of a claim • Until 1988 the stock reply to a claim for injury or property damage was – my fault? – prove it! • The only recourse was often legal action Denovo Underwriting Agencies Ltd Tel 01590 670055

7. Market State... ATTITUDE The “sue me if you don’t like it” approach was obviously unsustainable – it needed to change It doesn’t take a genius to work out that paying lawyers to have an argument for you is foolish, expensive & self sustaining Denovo Underwriting Agencies Ltd Tel 01590 670055

8. Market State • ATTITUDE • Equity demanded fairer treatment for “damage” be it property or personal • This emerged from the legislators as “strict liability” • The 1987 Consumer Protection Act reflected a complete change of Attitude Denovo Underwriting Agencies Ltd Tel 01590 670055

9. Market State • ATTITUDE • In particular The 1987 Consumer Protection Act introduced strict liability for injuries or damage caused by defective products into the UK – it’s fair to say life hasn’t been quite the same since! • The 2003 Consumer Protection legislation which was EEC driven has worsened the position significantly. Denovo Underwriting Agencies Ltd Tel 01590 670055

10. Market State • ATTITUDE • Of course the public have “noticed” • Encouraged by the legal “claim farmers” • Supported by “after the event” insurance • Driven by “someone must be to blame” and • I’m entitled to compensation…. • Claims payouts have dramatically increased Denovo Underwriting Agencies Ltd Tel 01590 670055

11. Policy Types Denovo Underwriting Agencies Ltd Tel 01590 670055

12. Employment Statutes Denovo Underwriting Agencies Ltd Tel 01590 670055

13. Other elements.. • Failure to maintain Employers Liability insurance carries a penalty of £2,500 per day • If a product is found to be defective within the first 6 months of it’s life it is deemed to have been defective when sold and can be rejected by the consumer • Most Product Liability policies exclude the cost of making good the defective product • If you go on the water or have custody & control of a vessel you need marine liability cover in addition to your other liability policies Denovo Underwriting Agencies Ltd Tel 01590 670055

14. Insurance is a component • It enables you to invest in your business knowing that if a disaster befalls you there will be a financial recovery and you will still have a future. • You share both the input and output sides of that commitment with every other business in the world • In disaster you share the benefit • In operation you share the cost • The actual cost is determined by peoples attitudes! Denovo Underwriting Agencies Ltd Tel 01590 670055

15. The leisure marine industry’s different • It certainly is • It’s one of the most expensive that exists from a claims standpoint • your clients are generally wealthy people • Many are successful business men & women • Most educate their children at University • Their toys are very expensive • Their expectations are extremely high Denovo Underwriting Agencies Ltd Tel 01590 670055

16. Claims - some examples • The sunbather - yanked off the deck • The collision - jammed in reverse • The splinter - a sticky end • The armlock - frolic at your peril • You just can’t be too careful! Denovo Underwriting Agencies Ltd Tel 01590 670055

17. In the face of rising claims costs, increasing legislationand therefore higher than historic premiums What can you do? • Understand and accept the economics of risk • Select your insured exposures carefully • Present your “risks” in the best possible light • Commit to risk management and control • Pro-actively manage claim avoidance/reduction • Proactively manage your complaints Denovo Underwriting Agencies Ltd Tel 01590 670055

18. A Good Start.. • British Safety Council • Offer a Safety Health Check • and courses on Risk Management • British Marine Federation • Also offers a range of courses that are industry specific • Plus… • Members who offer speciality surveys to identify marine risks and help manage them Denovo Underwriting Agencies Ltd Tel 01590 670055

19. Thank you for listening • Are there any questions? Denovo Underwriting Agencies Ltd Tel 01590 670055