What are Emerging Risks? There is no general definition.

Emerging Risks could be defined as developing or already known risks that may cause significant impact on the balance sheet of companies

Emerging risks in the Far East i.e. Southeast Asia and China

Asia is a continent where economic, social, legal and technological changes are happening faster than in any other parts of the world

Increasing adoption of consumer protection 'mentality'

Increasing shifts of production to the Far East has increased the liability exposure for the manufacturers

New stringent liability and consumer protection laws have increased litigation risk

Some Cases to illustrate these developments:

• In Singapore a woman was awarded 318,000 SGD (over 190,000 USD) in September 2005 for injuries caused by a toilet door in Raffles City Tower
• A Chinese High Court ruled that 580,000 silicosis sufferers could sue their employers even after receiving payouts under workers' compensation scheme
s
• 65 workers have filed a lawsuit against a battery manufacturer in Guangzhou, China claiming 1.8 million USD in compensation after they were allegedly poisoned in the course of their work

Gone are the days were Asians would blame Karma (fate) for injuries suffered by products. Especially China is experiencing a liability legislation and jurisdiction boom

Recent developments in Product Liability Legislation

Following Japan and the Philippines, Thailand is introducing a new strict liability law next year similar to those in force in Australia and Europe.

In China, the Product Liability Law of 1993 saw substantial amendments to the legislation governing product liability in 2000. The law includes design, manufacture, marketing and distribution of products

The Chinese Consumer Rights Protection Law now includes advertising liability and punitive damages

The consequence: Chinese consumers are making a growing number of claims against domestic retailers and manufacturers

Directors and Officers Liability

In February this year the 1st Asian Conference on Governance and Directors' and Officers' Liability Insurance was held in Singapore

The world of D&O in Asia changed in 1997, following the Asian crisis when one prominent case came to light where the directors of Samsung Electronics were sued for 259 million USD.

D&O cases are increasing in China, Singapore, Thailand and India

The landmark Hongguang Industry case successfully won by 11 investors for false representation has rocked the Chinese market

The recently amended PRC Company Law has increased the duties and liability of directors and officers. The PRC Labor Law includes liability of the board of a company towards its workers

Consequence for the Insurance Industry

The recent rise in number of lawsuits has triggered fears of an insurance claim explosion

Development of the liability insurance market is a priority of the China Regulatory Commission

In China the developments are overtaking the liability capacity provided by the insurers

Current Insurance Situation:

Disability of current liability insurance business model to provide cover with respect to the developments

Specific covers have developed into an all risk cover with too many exclusions

Casualty Insurance in China represents a challenge and an opportunity

Opportunity

Move Emerging Risks into business opportunities instead of increasing the exclusion catalogue

Expertise required to underwrite 'new' liability risks

The present policy language does not (yet) reflect the realities of the (liability) market situation. Policy language has to reflect the realities of the current market situation

To adapt products to new legislation and liability scenarios

This includes higher capacities for higher liability awards

No visible Leader Broker or Underwriter

A leading Broker or Underwriter could obtain a substantial market share

In China this means: Positioning within the next 6 to 12 months

---