Lorenzo Ranieri: "New insurance clauses are specifically stating that pandemics are not forces majeures"
The PG Legal litigator and arbitrator discusses changes in the insurance disputes landscape, some interesting work recently handled by the firm, and the ins and outs of yachting insurance.
Leaders League: Have you noticed a change in the kind of disputes you’ve been handling since the pandemic began?
Lorenzo Ranieri: There has been an increase in disputes that cite Covid-19 as an excuse to not fulfil debt obligations. Judges have begun asking for definitive proof of the impediment caused by the virus. You cannot simply say, “Covid stopped my business and stopped me from paying.” You must prove in detail that Covid-19 materially impacted your business. If you can, the judge may be sympathetic.
I suppose that the most important change is not strictly in disputes, but in insurers’ approach to negotiating the contract, and looking not just at Covid-19 but at pandemic contingencies more generally. We see the emergence of new clauses specifically referring to the pandemic not as a force majeure, but as something that can be covered only in very well-specified conditions.
Could you highlight two of the most interesting insurance disputes you’ve handled in the last year? We’d like as much exciting detail as possible, so if anonymizing the parties’ names will help, that would be fine.
One business interruption case concerned a large factory where a fire interrupted the business for three months. There were disputes between the various companies that owned the factory space; the factory owner suffered the damages. In order to reach a settlement, the main point of contention between insurers was how to split the liability between the parties.
There have also been a couple of arbitrations regarding large yachts, where warranty clauses were violated. In one case, the vessel was unable to fulfil its charter because of warranty works imperfectly performed. So the insurer refused to pay because its contract said that the first debtor – in this case, the shipyard – was liable. But I brokered a settlement between the yacht owner and the insurer: the insurer had to pay, simply because if a failure renders the yacht unable to complete its charter, no other debtor or operator involved in the failure is implicated in the contract. But the insurer got the chance to subrogate: the failure was the shipyard’s, in failing to properly perform its warranty works.
PG Legal has a niche in yachting insurance. Could you describe the kind of expertise this involves?
Since we have very deep experience in yacht litigation and events that can have an impact on yacht contracts, our specific skill is to negotiate insurance contracts. We provide the maximal cover that the party we represent can expect from the contract. If you don’t have specific skills here, even if you’re a well-prepared lawyer, you could not understand how many possible sliding doors could be faced in this world even after the contract has been signed and become effective. So many events you wouldn’t foresee get completely forgotten.
PG Legal has been active in insurance work for many years. How has the nature of insurance work changed over time?
The legal market for insurance has become far more competitive in the last five years. In the past, if you received some mandates as an insurance lawyer, your work would assume an almost automatic cycle, especially in litigation. It was not necessary to go the extra mile to get client trust and appointments.
Now, because of the incredible competition and the problems created by the Covid emergency, the client-lawyer relationship is more important than ever. If you want to maintain the appointments and the work relationships, you must offer something extra – not least your ability to handle any kind of problem the client may have.
So you must be available to respond when necessary, or organize a conference call with a couple of minutes’ notice. Also important is your ability to have a team that is highly specialized in specific fields of insurance. When you organize a meeting with lots of specialized lawyers, you can get prompt, specific and precise replies – they will tell you exactly what you need to know in that moment. This is a matter not just of knowledge and specialization but also of organization.
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