Antony Sassi is managing partner at RPC’s Hong Kong Asia practice and a leading litigator in the Hong Kong market, with a focus on defending professionals and D&Os relating to various tortious and contractual claims and advising more broadly on financial lines related matters. He is President of the HK Insurance Law Association and sits on the Law Society Insurance Committee, and has handled some of the largest claims in Asia over the last few years against various professionals. He has also been ranked in Band 1 for leading individuals in Chambers Asia since 2011. Carmel Green is an insurance lawyer specialising in financial lines and professional indemnity matters, with particular experience in handling largescale insurance-related disputes and advisory work. She is regularly instructed by insurers to review, approve and draft insurance policy wordings across various lines of insurance business. Carmel has been ranked as a leading individual in Chambers Asia since 2017. RPC is a global corporate and insurance law firm founded in London in 1898. It has been named Law Firm of the Year three times since 2014, and Best Legal Adviser every year since 2009. RPC’s team of 750 is recognised as industry-leading in insurance, retail, media, tech and numerous others. 75 JUN 2022 | WWW.LAWYER-MONTHLY.COM EXPERT INSIGHT notification to data subjects; we also partner with digital forensic and PR firms to deal with the full suite of technical and PR aspects arising from the breach. And, of course, we work with the insurer to comply with the necessary reporting requirements under the policy. What key trends do you foresee in the insurance and reinsurance markets over the next 12 months? While COVID-19 is still present, we can expect it to have a reduced impact on the insurance market in the coming 12 months. Despite a likely lingering feeling of uncertainty for the remainder of this year, financial commentators – including Deloitte – are reporting accelerated growth in Asia. With lockdowns and international travel restrictions gradually lifting, demand for personal accident and health insurance, which makes up the largest part of general insurance in Hong Kong, is set to rise. In the liability market, we expect to see the most growth in cyber insurance. As mentioned above, cyber policies have come into their own in the past two years and demand is continuing to rise. We also expect the trend for increased financial fraud cases and risks of insolvency to continue, which keep up demand for D&O insurance. A key interesting area of growth for the D&O / IPO insurance market is in the form of SPACs, or “blank cheque” companies. These are newly formed shell corporations listed on a stock exchange for the sole purpose of acquiring or merging with one or more target private operating companies. This enables the private company to go public more quickly, without going through the traditional IPO process. As an IPO will usually give rise to a “change in risk”, it is usually appropriate to take out a specific IPO / POSI policy to protect against the specific risks associated with IPO transactions, serving to ring-fence the exposure away from a company’s conventional D&O programme. Given the low cost of SPACs, we can expect their popularity to rise and for Asian exchanges to want in on the action. While a SPAC listing is similar to a reverse merger, which we know from experience have capacity to generate claims, there are key differences from a risk evaluation perspective. In an ever-hardening market, SPAC IPO D&O insurance is hard to come by and carries hefty premiums. This is increasingly flagged as a risk in prospectuses, especially by the larger sponsors. High premiums are of course common to new products where insurers lack sufficient historical data to assess risks. There are also considerations specific to this product which stand to affect premium: the “blank cheque” quality is difficult to model in underwriting; there is uncertainty of where the trust’s capital will be deployed, and carriers may not be able to issue long-term policies in accordance with reinsurance treaties. Underwriters placing these risks can therefore be expected to give due consideration to a range of factors, including: (i) the background and reputation of the sponsor; (ii) the amount of capital being raised; (iii) the target class of business; (iv) the location of the target business; (v) the specifics provided in the registration filings, and (vi) the quality of the team of professionals advising on the transaction. Although there is no requirement for insurance contracts to be in writing, it is universal practice.
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