BILA Seminar The Tohoku Earthquake

1
BILA SeminarThe Tohoku Earthquake Tsunami
Legal Issues

• Title slide
• Located at the start of every presentation
• Optionally, may be preceded by purple RPC quote
  holding slide from the sample deck
• Click and type main and sub-title in placeholder
  boxes
• Overtype presenter name (NB this is bottom
  aligned, and expands up for multiple presenters)
• Use View-gtHeader and Footer on menu and Footer to
  manually enter date, which also updates the date
  in page footers
• Uses Title Slide layout
• Format guidelines
• Title and Subtitle are in sentence case ONLY
  the first word of the title and any proper nouns
  are capitalised
• Date is in the following format 24 July 2011
• Do not abbreviate the month name and only
  capitalise the first letter of the month
• Do not change text size verbose titles will
  have less impact and should be edited

Daniel Saville
2
Overview

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• Japanese Insurance Act
• Adjustment issues
• Coverage and exclusions
• Business interruption
• Aggregation

1
3

• Simple bullets
• Remember the top-level of text is the subtitle
• The first bulleted level is therefore the second
  level overall

Insurance claims in Japan

• Insurance litigation unusual - few reported cases
• ADR clauses are common claims referred to ADR
  Centres prior to litigation
• New Insurance Act Law Number 56, 6th June 2008
• ??? - (????????????????)
• Chapter 2 - Damage Insurance Contract
• ??? ????

• Applies to (re)insurance policies subject to
  Japanese law
• Exemptions for marine, aviation, cargo nuclear

2
4

• Simple bullets
• Remember the top-level of text is the subtitle
• The first bulleted level is therefore the second
  level overall

??? ?? Section 1 Establishment
Article 4 Obligation to notify the Insurer When
entering into a damage insurance contract, the
insurance policy holder must notify the truth
to the insurer of material information relating
to the likelihood of damage arising, of which the
insurer requests notification... Article 28
Insurance can be cancelled due to non disclosure
for bad faith or gross negligence Article 31
Cancellation not retroactive unless damage
relates to non-disclosure
3
5

• Simple bullets
• Remember the top-level of text is the subtitle
• The first bulleted level is therefore the second
  level overall

??? ???? Section 3 Insurance Payment

• Article 13 Occurrence of damage and prevention
  of the magnification of damage
• Article 14 Obligation to give notice of damage
  - without delay

• Article 15 Destruction of insured items after
  insured damage
• Where damage to an insured item has occurred
  that is covered by the insurance contract, and
  the insured item is destroyed by an occurrence
  which is not covered by the insurer thereafter,
  the insurer is liable to pay
  for the damage.

4
6
??? ????Section 3 Insurance Payment

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• Article 18 Calculation of damage
  (over-insurance)
• Where agreed value significantly exceeds
  insurable value, insurable value will apply

• Article 19 Partial insurance (under-insurance)
• Recognises proportionate insurance

• Article 23 Responsibility for costs
• Insurer to pay for costs of loss calculation and
  mitigation

• Article 26 Mandatory provisions
• A special agreement which is disadvantageous to
  the insurance policy holder is invalid.

5
1 February 2011
7
Adjustment issues

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• General Insurance Association of Japan (GIAJ)
  certifying losses under homeowner policies in
  certain regions from satellite and aerial
  photographs
• Life Insurance Association of Japan announced
  that indemnification provisions will not be
  applied established database of missing persons
• Proper and businesslike adjustment procedures
  required for reinsurers to follow the settlements
• No official requirement for Japanese registered
  loss adjusters, although expected to use GIAJ
  Registered Property Loss Appraisers unless
  reason otherwise

6
8
Coverage - Earthquake Tsunami

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• Property all risks policies will cover losses
  subject to exclusions
• Policies covering specific insured perils (eg.
  fire, explosion, landslip) more likely to exclude
  earthquake
• Various terms could encompass damage by water
  'tsunami', 'tidal wave', 'inundation from the
  sea', 'flood
• Sher v Lafayette - Louisiana Supreme Court
  decision on flood exclusion following Hurricane
  Katrina losses

7
9
Nuclear Pollution Exclusions

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• Nuclear exclusions drafted broadly - refer to
  effect rather than source eg. ionising
  radiation or contamination'
• Check application of exclusion where concurrent
  causes Wayne Tank Pump Co v Employers
  Liability Assurance
• Pollution is generally excluded but

• may write back cover eg. for clean-up costs
  where pollution caused by an otherwise
  insured peril, or
• can extension of cover for pollution/
  contamination override nuclear exclusion?

8
10
Business Interruption

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• Overall losses to Japanese economy USD 300 bn
• Orient Express Hotels v Assicurazioni Generale
• Policy covered "loss due to interruption or
  interference with the Business directly
  arising from Damage"
• BI losses shall be adjusted "to provide for the
  trend of the Business and for variations in or
  special circumstances affecting the Business
  which would have affected the Business had the
  Damage not occurred
• Insurers entitled to exclude losses which would
  have been suffered but for damage to hotel

9
11
Contingent Business Interruption

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• Covers loss sustained to Insured's business by
  reason of one of its suppliers or customers
  suffering damage at their own premises
• How remote? direct supplier or any supplier
• Extension of cover for supply chain
• Physical damage of type insured by policy
• Territorial limits in direct policy and
  reinsurances

10
12
Aggregation and Hours clauses

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• Property policies - direct and reinsurance,
  commonly provide cover per event
• May be limited by an hours clause eg. LPO98a
• The words loss occurrence shall mean all
  individual losses arising out of and directly
  occasioned by one catastrophe. However, the
  duration and extent of any loss occurrence so
  defined shall be limited to ...
• (b) 72 consecutive hours as regards earthquake,
  seaquake, tidal wave and/or volcanic eruption
• Intervening causes such as power rationing
• Aggregation problematic for CBI losses

11
13
Conclusion

• Lead-in bullets
• Use the top-level of text as the lead-in text
• The first bulleted level is therefore the second
  level overall
• Each point (main bullet) begins with a capital
  letter then continues in lower case
• There should be no more than six bullet points
  (and fewer if they run longer than one line)
• Text must not exceed the bottom margin guide, and
  must not overlap the swoosh device

• (Re)insurers should be proactive
• understand claim handling procedures and where
  Act will apply
• bring in loss adjusters where appropriate
• keep retrocessionaires in the loop to avoid later
  disputes
• investigate far reaching CBI exposures

12