Fear of litigation is forcing ever more Swiss companies to insure their directors and employees against bad decisions and misdeeds.This content was published on July 27, 2002 - 11:07
With lawsuits pending against the management of the SAirGroup - the parent company of the defunct national carrier, Swissair - Swiss firms are growing more aware of the risks that they too could be sued, insurance brokers say.
"It's definitely an expanding market today," Pascal Schweingruber of the insurance broker Kessler Marsh told swissinfo. " I think all insurance companies have double-digit growth rates.
"We read about a lot of cases in Switzerland lately - we had Swissair, we had UBS a number of years ago - so the awareness of the risk certainly increased."
Directors' and Officers' Liability Insurance was first introduced to Switzerland by foreign companies 20 years ago to protect themselves against civil lawsuits by disgruntled employees and shareholders.
Since then more and more Swiss companies have decided to provide themselves with the safety net it offers and around 80 per cent of the big Swiss companies are now believed to be covered.
"The coverage in principle is for the personal liability of the employees and directors of a company for any wrongful act they commit in their respective capacity," Schweingruber explains.
He says insurance underwriters look at the company management and the amount of media attention the company receives when assessing the level of the premium. "The more they are in the news, the more people talk about the company, the higher the risk," according to Schweingruber.
The value of the Directors' and Officers' Liability Insurance market is currently estimated at SFr30-50 million.