News Coronavirus watch17 Mar 2020

Middle East may see rise in D&O claims

| 17 Mar 2020

Company boards will need to be prudent in managing the COVID-19 pandemic and ensure that they have a well-planned strategy for minimising business disruption, its impact on revenue and disrupted share prices. D&O liability insurers in the Middle East may see an increase in claims where the legislation in countries across the region, including Bahrain and the UAE, allows claims against company boards to be made for general 'mismanagement', said the Middle East insurance team of global law firm Norton Rose Fulbright.

D&O insurers writing Saudi Arabian risks, for example, need to be aware of the capital markets regime in Saudi Arabia, where the Capital Market Authority is active in assessing listed companies and has, in recent years, started high-profile investigations against local listed companies and their boards of directors for inaccurate reporting of their financial positions.

A new securities class action regime – the first of its kind in this region – recently came into force in Saudi Arabia and could result in an increase in multi-investor securities claim relating to a drop in share prices if the company is impacted by COVID-19, the law firm said.

For claims under liability-related policies, where it is alleged that an insured did not take reasonable precaution to manage its business or take precautions for its employees, Middle East insurers will need to carry out an early assessment of exposure, bearing in mind that many of the Middle East jurisdictions have legislation in force which allows liability claims to be brought on a broad and sometimes un-particularised basis – sometimes with success. Unlike other jurisdictions, such as the UK, there does not have to be a ‘duty of care’ or a contractual relationship between the parties for a cause of action under liability legislation to arise. The exposure for these sorts of claims could therefore be higher in this region, the law firm said.

There are numerous insurance considerations which are relevant to insurers dealing with Middle East risks and which are specific to wordings issued in this region, as well as the way in which liabilities typically arise. Norton Rose Fulbright advises insurers to start reviewing their wording and likely positions on different policies in advance of a significant uptake in claims.

| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.


Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.