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On 24th April 2006 the firm held a D&O seminar hosting members of the Israeli insurance market who deal with D&O Liability Insurance.
More than 140 participants attended the conference, which included insurance company employees as well as insurance consultants and agents, who all specifically deal with D&O insurance inIsrael.
Mr. Mark Bailey, the head of Financial Lines Claims A.I.G. Europe (U.K.) was the guest speaker. Mr. Bailey addressed the topic of Employment Practice Liability claims (EPL). His lecture identified the issues dealt with in EPL claims, when and where such claims occur, who can sue and who is the sued. According to Mr. Bailey, from a jury survey:
- 61% of jurors believe in sending messages to corporations to improve their behavior
- 68% would award punitive damages if the company was found guilty of causing injury to a person
- 100% said it is reasonable to believe a woman would not file a report against a supervisor who is sexually harassing her because she fears losing her job.
- 88% believe companies care more about profits than employees.
- 75% would tend to believe a woman who says she has been sexually harassed at work.
- 56% believe that if a case comes to trial, it must have merit.
Mr. Bailey also gave several examples of EPL claims: an in-house accountant wrongfully accused by his company of embezzlement; an overseas company doing business in US charged with reverse discrimination when an executive was fired; a manufacturer sued by a former female employee alleging wrongful termination, sexual harassment, sexual discrimination, and unfilled promises leading to costly settlements.
According to Mr. Bailey, in AIG's experience, 67% of all EPL claims originate from the US , and 33% from other countries. The claims outside the U.S. are divided as follows:
Wrongful termination (35%), discrimination (39%), sexual harassment (17%). Anti competition claims (1%), breach of contract (1%), misrepresentation (5%) and retaliation (2%) comprise the remaining fraction.
Mr. Bailey cited several examples from UK cases as well as Germany , and also expanded on Australian EPL claims.
In his summary, Mr. Bailey stated that EPL claims represent a global phenomena, and gave his grim forecast for the future, noting that with increased integration of national economies and globalization of larger companies which are subject to different laws and cultures, and taking into account the demands of international competition in both commerce and insurance markets, the consequential evolution of societal standards, legal standards will continue to likewise evolve, resulting in a global increase of awards and settlements.
Following Mr. Bailey's lecture, Adv. Moshe Abady, a partner of Levitan Sharon & Co. and the head of the D&O EPL desk, spoke on the exposure of EPL claims in Israel. He noted that unlike other countries, 10% of all EPL claims in Israel are for libel and slander, and 80% relate to unlawful termination of employment issues. Adv. Abady reviewed the various Israeli legislation which forms the basis for EPL claims, and mentioned that the new Procedural Class Action Law which entered into force on 12th March 2006, will no doubt bring a wave of EPL claims by way of class actions which has not be seen to date.
An additional review was given by Adv. Yossi Givoni, who gave a comprehensive explanation on Side A - D.I.C (Difference In Conditions) coverage which has in recent years become very popular in the American insurance market. The reasons which lead to the creation of this cover were reviewed, emphasizing its inherent advantage over the current covers in D&O policies. Adv. Givoni examined extensions, exclusions and advantages typical to this cover, and raised the question of its necessity/suitability to Israeli insurance market.
Following the said lecture Advs. Rachel Levitan and Peggy Sharon the two senior partners of Levitan Sharon & Co., presented by way of mock arguments, various sloppy wordings in existing D&O policies. Adv. Sharon acted as an insured requesting cover from an insurer, while Adv. Levitan represented the stubborn insurer who declines to grant the requested cover. The purpose of the mock dispute was highlighted by various ambiguous wordings included in the policy and its schedule which may give rise to a dispute on coverage in case of claim.
The last lecture of the conference was given by Adv. Tammy Greenberg, a partner in the firm and a member of the litigation team, who presented a review of Court precedents imposing personal liability on Directors and Officers based on several causes of action, such as negligence, breach of duty to act in good faith and personal infringement of patent.
In addition, Adv. Greenberg presented the position of the laws and the court on the possibility to pierce the corporate veil in respect of D&O's.
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