Dutch insurers must brace for post-pandemic claims

A leading Dutch insurance lawyer has predicted rising D&O and employers liability claims as the Netherlands government withdraws its range of Covid-19 support measures for business, including state reinsurance backing for the credit insurance sector that was pulled at the end of June. Suzanne Bordewijk, partner with WIJ Advocaten, a specialist law firm that is focused solely on insurance and liability law, and a new member of the fast-growing Global Insurance Law Connect network created to help with multinational coverage matters, told Commercial Risk that the Dutch insurance industry has not escaped its impact but insurers have responded quickly to the crisis. The pandemic has taken a toll on new premiums for Dutch insurers in certain lines of business, such as travel, events, cyber and trade credit insurance, and losses from these lines of business have been significant. Other lines of business such as motor, liability and property/BI seem to have been less affected by the pandemic. A notable difference with other European countries is the cover for business interruption losses caused by the pandemic. These losses are not covered by most standard policies in the Netherlands because these generally include the requirement that the insured property has sustained material damage caused by a named peril. As a result, WIJ has seen no such cases like those that have been more common in the UK, France and the US, where wordings appear to have been looser and more bespoke coverages were taken up, often as part of a global programme. Pandemic-related litigation in the Netherlands has therefore been relatively low, as in other leading European markets such as Germany and Italy. But Ms Bordewijk believes that the withdrawal of various government support measures as the Netherlands attempts to move on from the crisis management phase, which has been in place since last spring, will effectively unleash a new wave of claims largely because of a feared spike in bankruptcies as economic reality bites. “The main risks brought about by the pandemic from a business perspective are most likely business interruption and cyber-related incidents. So far, Dutch companies have dealt with this pretty well, and also because of the large extent of government support to companies and the high density of cyber insurance taken out in the Netherlands,” she explained. “Overall, the most important legal challenges produced by the pandemic in the Netherlands were not insurance-related. There has especially been a lot of litigation on rent-related issues and human resources. Also, the impact of Covid on commercial contracts has been litigated extensively,” continued the expert lawyer, whose firm this year celebrates its tenth anniversary. “The legal challenges in the Dutch insurance industry have been fairly limited. We, as an insurance law firm, have not dealt with many cases related to the pandemic, simply because in the field of insurance the pandemic did not cause a lot of legal challenges. The insurance business side was of course impacted heavily, but this did not lead to any serious (new) coverage issues,” added Ms Bordewijk. “Netherlands-wide, there have thus far only been a few proceedings under insurance law in which Covid-19 played a role, mainly in the event insurance industry,” she said. But Ms Bordewijk said her firm does expect that the number of D&O claims and the number of claims under credit insurance will increase in the coming months. An important driver for this type of claim is the expected number of bankruptcies. “Even though the number of bankruptcies in the Netherlands has not been this low in years, a catching-up process is expected as soon as the peak of the crisis is over and the government’s support measures come to an end. Expectations are that the number of bankruptcies will then increase,” she explained. One area of specific concern for Dutch risk and insurance managers and insurers is credit insurance. As elsewhere in Europe, the Dutch government provided reinsurance backing for the credit insurance market last spring, as cover evaporated in the face of potentially huge losses. In February of this year, the Dutch government extended its support for the trade credit insurance market until 30 June 2021.The maximum amount guaranteed was €12bn and applied to any claims paid out and potential claims pertaining to deliveries that have taken place from 1 January 2020 up to and including 30 June 2021. Now that the government support has come to an end, Ms Bordewijk fears that this will have a severe impact. “If the support for the trade credit insurance market is not extended further, credit insurers will start withdrawing credit limits. In particular, credit limits that were held in place due to the government support will be at risk of withdrawal after the support ends. Another effect will most likely be a further increase of premium. Altogether, we expect a definite increase of (financial) risk,” she warned.

Dutch insurers must brace for post-pandemic claims

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