The dark side of digitisation - Implications of the coal phase-out CYBER MARKET - Funk Gruppe
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18 August 2021
MARKET EDITION
SUSTAINABILITY
Implications of the
coal phase-out
LIABILITY TECHNICAL CONSTRUCTION
PROPERTY
INSURANCE
TRANSPORT VEHICLE D&O CYBER
CYBER MARKET
The dark side
FIDELITY CREDIT ACCIDENT LEGAL PROTECTION M&A
of digitisation
THE GERMAN INSURANCE MARKET IN 2021
More mettle for individual solutions!
The trend towards low cover and high pre- astrophic events such as inclement weather
miums has continued due to the pandemic and a pandemic. These values show that a
and natural disasters. Property, cyber and large number of insurers in the industrial
executive liability (D&O) insurance are espe- insurance segment have lost money. The
cially affected. catastrophic flooding in Germany as a re-
Ralf Becker
sult of storm Bernd will also be expensive: Managing Partner
Companies suffering from the effects of according to an initial estimate from direct of Funk
the pandemic are asking themselves why insurers, the German Federal Financial
insurers now need to raise premiums once Supervisory Authority expects the total cost
again. After all, these companies have of insured damage to reach up to 5.7 billion
already been facing hardship. Due to the euros for the industry.
Covid pandemic, their financial situation
and medium-term business prospects have
often not only not improved, but some- Standing firm
times even gotten worse. Many companies
are struggling with business interruptions, Funk is fighting for its clients with a firm
for example, because their supply chains stance in favour of individual solutions
have been disrupted. that strike a balance between premium
amounts and risk assumption as well as
As a result, finance executives look for more efficient processes on the part of the
ways to reduce costs and find savings. But insurers.
instead, they are frequently confronted with
rising insurance costs. Companies are thus In the course of recovery efforts, many
having increasing difficulty on the market insurers are increasingly turning to stand-
finding the insurance cover they require ard guidelines and tools in underwriting, an
within the budget they have planned for. action which is shaping negotiations and
decisions. But clients need individual solu-
On the other hand, insurers’ balance sheets tions. Funk is therefore urging insurers to
have also suffered. Risk assumption and have more courage and willingness to find
premium amounts have diverged further solutions that can offer clients real support
and further over the past decade, leading by meeting their individual needs.
many insurers to report combined ratios of The industrial insurance sector comes with
more than 100 per cent – even without cat- a certain amount of volatility as a matter of
The best recommendation. Funk. | 2
course. Nevertheless, extreme fluctuations ‘Funk renewal agenda’
in insurers’ offers for premiums and cover
cannot go on forever, just as insurers’ bal- Funk is using innovative solutions to keep
ance sheets for technical insurance cannot adequate insurance cover within reach.
perpetually exist in the red. We have already joined discussions for the
upcoming round of policy renewals very
The goal must be to strike a balance so early on as we pursue our tried-and-tested
that the premium charged fairly reflects the ‘renewal agenda’, an action plan based on
amount of risk assumed, without shocking, good experiences from previous years. In
disproportionate fluctuations year after these negotiations, for example, we take
year. Companies and insurers should aim into account the policy holder’s individual
to cultivate a long-term partnership in the claims history, technical price modelling
transfer and assumption of risks, and this is and aggregate risk factors. Our profession-
something Funk facilitates as a broker. al risk management, wide range of place-
ment options – including internationally –
Insurers must also do their part by reduc- and alternative risk assumption models
ing their costs and passing on the savings round off our complete package of holistic
gained to clients when calculating their services.
premiums. After all, processes in industrial
insurance need to become much more We’ll take care of that policy renewal! We
streamlined and efficient. are on your side as your proactive partner.
Ralf Becker
Current risk studies
Armed with knowledge: risk managers have to stay up to date in order to make the
right decisions. Risk studies play a fundamental role in keeping them informed. We
have compiled the most important studies for you on our German website, along
with the five key takeaways.
funk-gruppe.com/risikostudien
The best recommendation. Funk. | 3
Property insurance PREMIUMS COVER
The property insurance market is shaped high adjustments of premiums, or insurers Outlook
by a constant onslaught of damage and are increasingly not offering the option of
major claims. 2021 has already seen renewing policies. Risks with an average The concrete extent of the
enormous adverse weather events such as fire protection standard are more moder- damage in 2021 remains to be
storms, flooding, heavy rain and hail. The ately affected, depending on the insurer’s seen – including reinsurers.
German Insurance Association (GDV) es- recovery strategy. Companies with good to Continued increases of premi-
timates that 2021 will be the most claims- very good fire protection should currently ums, rising deductibles and
heavy year since 2002, the year of the expect only minor adjustments to premi- decreasing payout limits for
river Elbe flood. Commercial and indus- ums. natural hazards are likely in
trial plants are also significantly affected the coming years.
because their operation is interrupted by In addition to fire protection quality, mar-
damaged machinery. Access roads and ket capacities also affect premiums. For
supply routes are also closed off. companies with good fire protection and Your point of contact:
a very good claims history, competition How Funk helps
Alongside property damage, the topic of among insurers is slightly increasing again.
Our fire protection engi-
business interruption is another major
neers help you devise
focus for many insurers. The global supply In several industries, insurers are offer-
concepts and measures
chains are still fragile because of the Covid ing less cover or are even issuing blanket Christian Pietsch
that assess and adequately meet in-
pandemic. For example, the fire suffered bans on underwriting any policy at all. c.pietsch@
surers’ requirements. The Funk Smart
by the Japanese semiconductor corpora- This is true, for example, in the recycling funk-gruppe.de
BI Check offers support for supply
tion Renesas in March 2021 has led to a and coal-powered electricity industries, chains: it clarifies the risk and helps
shortage of chips. A precise analysis of the some sectors of the food industry and you make sensible decisions for mini-
supply chain risk is therefore essential for the electroplating industry (a special type mising and avoiding risk. We are also
companies which are heavily invested in of metalworking). Sustainability aspects happy to advise you when reviewing
supplier networks. partially come into play here (see article on the individual insured sum and devis-
page 17). ing risk acceptance strategies.
Effective fire protection measures also re-
main an important consideration, as these The development which began in the German info on risk acceptance:
have direct implications for insurance previous year of insurers pushing for funk-gruppe.com/eigentragung
cover and premiums. exclusions for pandemics, communicable
diseases and cyber risks continues in this German info about flooding:
We see the market roughly divided into year as well. Funk is negotiating intensive- funk-gruppe.com/hochwasser
three parts: below-average cover of risks ly with insurers in order to minimise the
juxtaposed against high deductibles and implications for clients.
The best recommendation. Funk. | 4
Liability insurance PREMIUMS COVER
The industrial liability market has somewhat cover and also consider the prospect of
hardened in the past year: insurers have co-insurance of unspecified financial losses.
reduced their cover, raised premiums – in
some cases even dramatically so – and
asked for significantly higher deductibles. Outlook
As electromobility expands, the market is
intensifying, especially where vehicle recall The trend described here will continue in
insurance is concerned. In addition to the upcoming policy renewal negotiations.
fact that warranty/guarantee periods are However, the liability insurance market is
being extended to eight or more years, the not currently seeing a general increase
technology is also still relatively new, mak- in premiums and reduction of cover. The
ing the risk difficult to calculate for liability planned introduction of the German Supply
insurers. Chain Act (LKG) could raise new liability
issues. There is good news, however, in that
Prominent examples like the diesel scandal the option of a civil lawsuit in the event that How Funk helps
have shown that recall obligations can be corporate due diligence obligations are
triggered not just by the risk of personal breached was struck from the law shortly We check whether additional risk
injury or property damage, but also by before its introduction. acceptance strategies such as ‘self-in-
failure to comply with environmental stand- sured retention’ (SIR) can be used to counter
ards. The automotive supplier industry is price increases or whether special solutions such
as excess policies are a possibility. Unlike with
therefore especially affected by increases Your point of contact:
deductibles, in the case of SIR models the insurer
of premiums, along with the pharmaceuti-
does not get involved until the agreed amount has
cal industry and companies with heavy US
been reached – even when defence of a claim is
exposure. The reason for this is that liability
concerned. We also determine whether a policy
insurers in these fields have had to pay the
can be underwritten by a consortium as opposed
highest amounts of damage in past years. Jan Timmermann
to just one insurer. Furthermore, the Funk Liability
j.timmermann@funk-gruppe.de
Stress Test helps identify a plausible amount of
Furthermore, companies are increasingly cover based on a scenario that takes previous and
being faced with demands that are not future liability claims into account.
insured, such as higher testing or sorting
costs after delivery of faulty products or the German article about the Supply Chain Act:
costs of downtime on their customer’s end. funk-gruppe.com/blog-lieferketten
We recommend that companies check their
The best recommendation. Funk. | 5
Technical insurance PREMIUMS COVER
To a large extent, the technical fuels – coal, oil and gas – are concerned, Outlook
insurance market remains there is increasingly less cover offered in
stable for traditional risks in technical insurance policies on the German It is still in the insurers’ interest to under-
2021. Insurers are only de- market (see article on page 17). Funk is write risks in the technical insurance sector.
manding higher premiums checking cover on international markets for Modern technologies such as sensors
in cases where the individual affected companies and is also investigat- (‘condition monitoring’) are having an in-
claims history of a company ing the implementation of risk acceptance creasingly positive effect on claims histories
justifies it. strategies. and are contributing to a stable market
environment.
How Funk helps From the insurers’ per- In individual countries such as Russia,
spective, sustainable existing international sanctions are having
Our team of engineers assists capital assets are gaining a limiting effect on the market this year as Your point of contact:
companies with claims and helps importance. ESG crite- well. New policies in the United Kingdom
conduct professional risk analyses. ria – aspects of envi- are still only being concluded locally due to
ronmental, social and Brexit. Nevertheless, Funk is always check-
Funk has joined the energy providers’ sustainable corporate ing whether financial interest solutions are
investment offensive to make phasing out governance – are possible, whereby the German parent com- Uwe Janssen
coal easier, for example. With our invest- increasingly being pany’s financial risk abroad is protected. u.janssen@funk-gruppe.de
ment protection, we are securing funds used to make deci- This would come into play, for example, if a
against the risk that the relevant deadline sions. Among other machine abroad is damaged and replace-
for commissioning the systems is not met things, this is leading ment parts procured from Germany are
due to property damage or another delay many insurers to used to repair it.
in the supply chain, for example. This take a negative view
reduces the risk to the company. towards underwrit- The Covid pandemic has led and continues
ing coal-related to lead to further exclusions. Pandemic
With Funk’s extended warranty policies, risks even now, exclusions have had to be included in local
you can cultivate customer loyalty even although the Ger- policies at international level this year as
after the statutory warranty period has man government well. Both pandemic and cyber exclusions
ended. Offers that go beyond legal re- has set 2038 as are anticipated to be required in German
quirements discourage customers from the definitive insurance policies from 2023 at the latest.
switching to other providers and therefore exit date for the Funk is currently negotiating intensively on
protect your service business. coal phase-out. possible clauses, in order to mitigate the
Where fossil implications for companies.
The best recommendation. Funk. | 6
Construction
project business
PREMIUMS COVER
The construction boom marches on de- Outlook
spite the Covid pandemic. As a result, the
demand for combined contractors all risk In the project business, insurers are likely
and liability insurance has sharply increased to decline covering complex risks for major
for construction projects, especially major construction projects.
projects. The pandemic has made its mark
where building materials are concerned,
however: some manufacturers shut down Your points of contact:
and deliveries were delayed. This led to
an increase in general construction prices
and to delays or extensions of construction
phases, thus increasing the cost of insur-
ance for major construction projects. Dirk Berthold
d.berthold@funk-gruppe.de
Claims payouts are increasing in the project
business, which is causing premiums to rise
by ten percent on average. Adding to the
complications, some insurers are withdraw-
How Funk helps ing from this sector and there are fewer
leading insurers offering their services. Robert Dallmann
Our special interdisciplinary team of
experts from the fields of engineering, Many insurers are also demanding a pan- r.dallmann@funk-gruppe.de
law and fire protection provides assistance in your demic exclusion for project policies.
project business. For simple construction projects,
Funk offers a quick concept solution for which almost Insurers need a large amount of informa-
no risk information is needed. For more complex pro- tion in order to assess risk. The demand for
jects, Funk creates a combined policy that is precisely business interruption insurance to cover
tailored to the risk profile of the respective project. the financial impact of delayed completion
of a project has risen especially for major
English info about our services: construction and installation projects. The
funk-gruppe.com/construction market is very limited here as well.
The best recommendation. Funk. | 7
Transport insurance PREMIUMS COVER
Many transport insurers and syndicates already been introduced in American and
– which act as providers of risk cover on Japanese transport policies and the Ger-
the British insurance market Lloyd’s – have man market is now set to follow. The GDV
significantly reduced or even complete- has published standard clauses for this
ly withdrawn their transport insurance and many insurers will adopt these, which
cover in past years due to poor financial should stave off the dreaded escalation of
results. Several insurers have also merged, unending exclusions, depending on the
which has further reduced capacity. Cover insurer.
with high insured sums and international
programme policies have been especially Due to Brexit, local policies must now be
affected. installed for offices and subsidiaries in
the UK. Insuring risks through freedom of
While the combined ratios of transport service cover (FOS policy) from Germany is
insurers in 2020 had improved compared now no longer possible in many cases.
to previous years, several events involving How Funk helps
major damage have recently occurred. Funk proactively negotiates with
Transport insurers are responding to cur- Outlook insurers on the scope of cover ex-
rent major events, such as the obstruction clusions. We use what are known
of the Suez Canal by the container ship Ever Current loss events and the digitisation of as ‘write-back’ clauses for our clients to ensure
Given or the temporary shutdown of ports supply chains mean that the situation for that a majority of these excluded risks are includ-
due to the Covid pandemic (most recently transport insurers remains challenging. ed once again. Through our international Funk
Yantian and the Ningbo Maidong terminal Alliance network, we advise our clients on interna-
in China), by restricting the cover they offer. tional matters such as the impact of Brexit.
We are also assuming that insurers are de- Your point of contact:
manding higher premiums in some cases More German info about exclusions in
due to the individual risk situation. transport insurance:
funk-gruppe.com/
Current events demonstrate to market play- blog-transportversicherung
ers how prone to disruption global supply
chains are and how quickly cumulative risks Thilo Wandel More German info about the impact of the
can arise. Driven by the reinsurance mar- t.wandel@funk-gruppe.de Suez Canal incident:
kets, this year’s round of policy renewals will funk-gruppe.com/suezkanal
include cover exclusions for cyber, blackout
and pandemic risks. These exclusions have
The best recommendation. Funk. | 8
Vehicle insurance PREMIUMS COVER
How Funk helps
Funk checks which solutions apply to
Significantly fewer vehicles have been out Outlook the individual situation. For example,
with Funk’s support companies can take advan-
on Germany’s roads in the past one and
tage of tax benefits, optimise their deductibles,
a half years due to the pandemic, mean- In the long term, the vehicle line of insur-
reduce damages through professional claims
ing that the frequency of claims has also ance will also have to deal with cyber risks,
management and streamline processes through
drastically reduced. The cost of an individu- because increasing automation will mean
all-inclusive contracts. Return costs for leased
al claim has risen by about five percent on that vehicles are more vulnerable to hack-
vehicles can be reduced through Funk’s network.
average both in liability and fully compre- ing. The accident risk during autonomous
hensive insurance. This is due to increas- driving could also permanently shift to the
ing replacement part prices and not least manufacturer, which would reduce the risk
complications in the supply chains on the to be covered by vehicle insurance. Never-
one hand, and due to increasing technolo- theless, we still do not expect entire vehicle
gy in the vehicles on the other. Despite this, fleets to be fully networked in the short to
claims ratios have trended downwards by medium term.
10 to 15 percent, having a positive effect on
premiums.
Your point of contact:
The vehicle insurance market has also been
affected by inclement weather in 2021,
however. How severe the implications for
premiums are remains to be seen. On
balance we do not expect premiums to Anton Knitsch
continue to decrease. a.knitsch@funk-gruppe.de
The demand of some insurers for new busi-
ness has improved, so there is sufficient
cover on the market.
The best recommendation. Funk. | 9
D&O insurance PREMIUMS COVER
Insurers are not yet able to fully deter- International insurance programmes are
mine the extent of the implications of the gaining greater importance in order to
pandemic for the D&O line of insurance. meet regulatory and tax law requirements.
Several major claims have had an impact, In this area especially, the number of insur-
as have the persistently high costs in cases ers which can offer global support here is
of executive liability. Insurers therefore much smaller than what is already a small
continue to be cautious where underwrit- provider market.
ing D&O policies in industries especially af-
fected by the Covid pandemic is concerned
– industries such as logistics, aviation, Outlook
travel, automotive supply and retail. They
occasionally even refuse to underwrite such The existing market situation will contin-
policies at all. ue to be challenging. We expect further
implications in the next one to two years
In general insurers are continuing to as a result of new laws that will foreseeably
reduce individual cover and are tightening increase the risk to organisations. Such How Funk helps
up terms and conditions. For example, they laws primarily include the Supply Chain Act,
We are conducting intensive, de-
are implementing shorter extended report- the Whistle-blower Directive and the Cor-
manding negotiations with our exist-
ing periods, no longer offering a guarantee porate Stabilisation and Restructuring Act
ing insurers to extensively preserve
of continuity, no longer offering a rein- (StaRuG). The Corporate Sanctioning Act
the Funk special conditions that have been sig-
statement option when the insured sum is would also have big implications if it were
nificantly higher than the market level for years
spent, or they are implementing insolvency implemented.
already. We are also using all available markets.
exclusions.
To assess the increasing compliance requirements
Premiums are being raised by at least 15 Your point of contact: for companies, Funk has developed the Compli-
to 25 percent, and in some cases by much ance Quick Check. Funk provides regular infor-
more. Even very large D&O programmes Philipp Meyer-Diekena mation about new laws and their implications for
with cover of 100 million euros or more are p.meyer-diekena@funk-gruppe.de insurance cover. You are welcome to subscribe to
sometimes difficult to renew for 2022 with- our newsletter (see page 18).
out adjustments to cover. There is a need
for much more intensive consultancy and German info about the Compliance Check:
agreement with potential risk carriers here. funk-gruppe.com/compliance
The best recommendation. Funk. | 10How Funk helps
Our cyber team consists of lawyers, risk managers
and insurance and IT security experts. Thanks to this
interdisciplinary approach we are able to present your individ-
ual risk situation to insurers as a much more harmonised case
in line with market requirements. We have also partnered with
renowned external cyber risk engineering service providers which
actively strengthen the risk prevention measures.
Read more about protecting digital processes – and new
opportunities – in our German special digital edition:
funk-gruppe.com/digital-spezial
Cyber insurance PREMIUMS COVER
Digitisation made huge progress worldwide often just five million euros now. On the Ultimately we are seeing rising demands market requirements by taking extensive
due to the Covid pandemic. Many com- other hand, insurers only want to take part from insurers concerning the IT maturity of stock of the technical and organisational
panies rushed to digitise processes, had in higher amounts of cover – even well the companies to be insured. This is espe- IT security measures. The measures to be
their employees start working from home beyond 20 million euros. cially true where multi-factor authentication implemented directly affect the insurer’s
or made long-planned digitisation projects and segmentation are concerned, in order underwriting. These measures also play a
a greater priority. IT security was also a At the same time, premiums and deducti- to strike a balance between risk and secu- crucial role in the compensation paid in the
focus of companies. Overall this has led to bles are sometimes being increased mas- rity level. Individual companies may not be event of a claim.
a rising demand for cyber insurance – a sively in order to reorganise the often very able to implement the required measures
demand that currently exceeds insurers’ claims-heavy existing policies. Moreover, quickly, which is why it is possible that in
existing offerings and capacities. many insurers are implementing tighter the case of upcoming renewals, not all risks Your point of contact:
terms and conditions, especially where can be placed on the market.
There are various reasons for insurers’ cau- ransomware incidents are concerned. Michael Winte
tious approach to underwriting cyber risks: m.winte@funk-gruppe.de
on the one hand, increasing claims vol- Claims related to a corresponding event Outlook
umes are resulting in massive restrictions, are sub-limited by many insurers and come
which are inflicted on insurance companies with high (separate) deductibles. Cumula- Cyber risk engineering services are gaining
operating in Germany from abroad. Such tive risks, such as the HAFNIUM exploits importance as companies strive to stay
restrictions include, for example, significant (attacks on the Microsoft Exchange Server), operational and meet the demands of the
reductions of cover from what was 10 to are also being increasingly considered by insurance market. Funk helps bring the
15 million euros per insurer previously to the insurance sector. existing IT maturity in line with insurance
The best recommendation. Funk. | 11Fidelity insurance PREMIUMS COVER
The Covid pandemic has drastically Outlook
changed our day-to-day work and previous
workflows and processes. Working from We expect to continue to see increasing
home in particular poses new risks in addi- premiums and decreasing cover, especially
tion to the opportunities it unleashes. with an even more restrictive limit on cyber
insurance. Insurers may noticeably reduce
Social engineering is increasingly becoming the scope of existing cyber modules. Risk
the focus. The (physical) distance from the assessments will continue to gain impor-
office and from colleagues creates new tance.
openings for criminals because internal ap-
proval processes and standard channels of
communication can only be maintained in Your point of contact:
a limited way. In addition, claims due to IT
attacks are increasingly attracting insurers’
attention. Limits in cover for cyber insur-
ance come into greater focus here as well.
Alexandra Köttgen
Ultimately all of these factors are causing a.koettgen@funk-gruppe.de
insurers to take a more and more restrictive
approach to underwriting fidelity insurance
policies. They are taking a much closer look
How Funk helps at risks, which is then making the assump-
tion of these risks more expensive. Similarly
Organisational protective measures
to cyber insurance, we are also seeing a
within the internal control systems are
tendency in the meantime to reduce cover
becoming more important. Companies
and adjust premiums and deductibles at
can meet these requirements with phishing
the same time. The increases are less dra-
campaigns and employee training – and we are
matic than in cyber insurance, but the trend
happy to help with that. The implementation of
is still going in a similar direction.
appropriate measures will no longer mean sav-
ings in premiums in future, as this will be a basic
requirement for even purchasing insurance cover
to begin with.
The best recommendation. Funk. | 12How Funk helps
Funk utilises the full market spectrum to achieve cover for
failure-to-pay risks that is as comprehensive as possible. Funk helps
meet liquidity needs through factoring. Funk also procures cover
from surety insurers, where necessary, which takes the pressure off
of bank lines of credit. This expansion of financing options increases
companies’ resilience to negative developments in the economic
environment and gives them more room to manoeuvre.
More English info about the developments in credit insurance:
funk-gruppe.com/credit-insurance
Credit insurance PREMIUMS COVER
Once the suspension of the obligation to important raw materials and therefore to a wording includes terms and conditions these figures stay below insurers’ expecta-
file for insolvency has ended and support higher need for protection along the value that are sometimes better for clients and tions, the availability of cover will continue
measures for companies have stopped, creation chains. sometimes worse. to improve due to the increasing competi-
insurers are expecting a rise in insolvency tion among credit insurers.
figures in many countries. They are prepar- The procurement of sufficient cover is
ing for this by demanding higher premiums currently one important challenge. In Outlook
and being more cautious in underwriting addition, companies are now faced with Your point of contact:
credit limits. having to finance the restart of production The German government wants to suspend
after months of low turnover due to the the obligation to file for insolvency for
In light of the initially low insolvency figures pandemic. For many companies, factoring companies affected by the recent flooding
still reported in many key markets and in- – the sale of their receivables – is a suitable disaster. A corresponding law is still to be
dustries, insurers have somewhat loosened instrument for covering even large fluctua- discussed in August. This could give some Sebastian Kentenich
their very strict approach in the meantime. tions of financial needs. companies a short-term boost. s.kentenich@funk-gruppe.de
Many markets have seen a significant At the same time, major insurers have The availability of credit insurance cover in
economic recovery. Among other things, developed new wording. Existing policies the coming months also depends signifi-
this has led to much higher prices for need to be revised in line with this. The new cantly on how insolvency figures develop. If
The best recommendation. Funk. | 13Accident insurance PREMIUMS COVER
Market conditions remain stable. The cover is no uniform picture here and above all, no
schemes provided by group accident insur- empirical values yet. Existing cover may be
ance are still very extensive and premiums extended to cover this, however, by paying
are low. an additional premium if necessary.
Many companies have since decided to
offer working from home as a permanent Outlook
option for their employees rather than
just as an interim solution necessitated by We do not expect insurers to change their
the Covid pandemic. As a result, accidents offering.
in the home workplace environment are
becoming a more important consideration.
Not all accidents in this context are insured Your point of contact:
– for example tripping on the way from
one’s home office to their children’s school.
Employers can close this gap with 24-hour
cover. Funk is happy to advise you on insur-
ance cover for working from home. Claudia Wittenhagen
c.wittenhagen@funk-gruppe.de
Companies are also considering the topic
of vaccination. Side effects from vaccines
usually pass quickly, but the possible long-
term effects of the new vaccine are not yet
known. Some employers are wondering
whether possible vaccination damage
How Funk helps
among their employees is covered by com-
We are happy to check your existing cov- pany-wide group accident insurance. There
er and advise you on insurance cover for
working from home and vaccination damage.
More German info on vaccination damage:
funk-gruppe.com/impfen
The best recommendation. Funk. | 14How Funk helps
We take current developments into account
Legal protection insurance PREMIUMS COVER
in our criminal defence insurance terms
and conditions. Extended preventative modules, The market situation remains tense. The can be taken out as a standalone solution
such as internal research costs prior to launching
reasons for this include, among others, that or alongside a D&O policy.
preliminary proceedings and high upper limits for
lawyers’ fees increased on 1 January 2021
forensic services, are included.
and that there has been a significant in-
crease in legal protection cases, especially Outlook
under employment law.
Upcoming considerations on the possible
Claims for criminal law protection in cases introduction of criminal liability for compa-
concerning financial responsibility, such as nies increase pressure on management to
criminal insolvency and criminal tax pro- consistently implement compliance meas-
ceedings, are also continuing to increase. ures and initiate internal investigations in
Insured sums set out in policies are some- an emergency. After all, if this law comes
times completely depleted. For this reason, into force, it is not only just natural per-
companies should lean towards agreeing sons who face criminal consequences, but
higher insured sums than previously when companies as well. This would then have
taking out criminal defence insurance. implications for legal protection insurance.
Many companies have had to cope with re-
duced turnover during the Covid pandemic. Your point of contact:
Insolvencies have not noticeably increased
due to the temporary suspension of the
obligation to file for insolvency, but this re-
lief measure has now ended with effect on
30 April 2021. Corporate responsibilities in Ulla Boelsems
this critical phase are therefore fully appli- u.boelsems@funk-gruppe.de
cable once again. D&O insurance is increas-
ingly gaining in importance. Many insurers
have reduced their insured sum or scope
of services, and are increasingly raising pre-
miums. When in doubt, protection provided
by D&O insurance can be enhanced with a
financial loss legal protection insurance pol-
icy. This financial loss legal protection policy
The best recommendation. Funk. | 15M&A insurance PREMIUMS COVER
Acquisitions of companies partially came Your points of contact:
to a standstill during the Covid pandemic.
Nevertheless, the insurance market for
M&A transactions is constantly growing.
Premiums have been at a low and stable
level for years. At the same time, there has Benedict Prinzenberg
been a slight increase in available market b.prinzenberg@funk-gruppe.de
capacities.
The challenges we find in this sector come
in placing transaction insurance where
‘loss-making targets’ – companies that were
not profitable in previous years – are in- Jan Wehkamp
volved. Otherwise insurers have mostly not j.wehkamp@funk-gruppe.de
changed their behaviour. The feared wave
of insolvencies and the associated expected
rise in policies with synthetic warranties
have thus far not materialised and play
hardly any role in practice.
Outlook
Alongside the recovering economy, we
expect to see an increasing number of M&A
How Funk helps
transactions in the German-speaking realm. A clean and comprehensive due dili-
Cash-rich companies now see a strategic gence check is essential in order to take out good
perspective to acquiring struggling compa- warranty and indemnity (W&I) insurance. Funk
nies. At the same time, developments like helps you even in the early stages to define the
digitisation, climate chance and new com- scope of the due diligence check so that you can
petitors strengthen the need for consolida- secure as comprehensive a W&I policy as possible.
tion of entire industries.
The best recommendation. Funk. | 16SUSTAINABILITY
Coal phase-out, questions of liability and new risks
The topic of sustainability has reached the ability. Many insurers are declining to do Emerging risks in industry Many companies are also increasingly
insurance sector – and the industrial sector. business with companies that negatively implementing work-from-home policies
Clients, governments and regulatory bodies contribute to the climate crisis – which Industry also needs to implement several and using video technology. If, for example,
are demanding that companies accept has implications for all lines of insurance. new sustainability guidelines. These primar- employees take part in meetings digitally
more responsibility for their capital assets It primarily affects companies that extract ily affect liability insurance. For example, the instead of flying in or using a company car
and handle resources in a sustainable way. fossil fuels such as oil or coal or use these diesel scandal showed that recall obliga- to attend in person, this saves time, money
Many companies do not require external as energy sources. tions can be triggered not just by the risk and CO2. However, it increases the risk of
pressure, however, and make ESG a priority of personal injury or property damage, but damage in the cyber or fidelity insurance
themselves, going beyond legal require- This political and business decision im- also by failure to comply with environmen- sectors.
ments. ESG stands for environmental, social plemented by many insurers is primarily tal standards.
and corporate governance – three aspects applied just to new business, but existing Every era has its opportunities and risks.
that companies voluntarily take into ac- clients are also affected. There is a possi- The planned Supply Chain Act in turn will Holistic risk and insurance management
count in their decision-making process. bility that coal-heavy companies will have protect human rights and have implications is needed to control these emerging risks.
to carry some of their risk themselves in for questions of liability. D&O and legal And it should also be sustainable – i.e.
the medium term because their insurance protection insurance are also indirectly reviewed on a regular basis. We are happy
Insurers are rejecting coal cover is not renewed. For this reason, affected. to help with this.
they need well devised risk acceptance
In its energy policies, the German govern- strategies or insurance cover on the small If companies retrofit buildings and systems
ment has set the deadline for completely remaining insurance market will become for sustainability reasons, this could also
phasing out coal by 2038. Insurers have more expensive. At the same time, the raise new risks. For example, if they build
consequently already started switching insurance sector is supporting the change photovoltaic systems or install charging
their own capital assets to ‘green’ invest- to renewable energy through special insur- columns for electric vehicles, property in-
ments. The core business of risk assump- ance schemes, like for storage batteries or surance or technical insurance policies may
tion is also increasingly focused on sustain- for covering government subsidies. need to be adapted.
The best recommendation. Funk. | 17Always where you need us
Get in touch with us! About Funk
Hamburg We provide more security at 35 international Funk is the largest family-run insurance broker and risk
Berlin offices. We are also represented at 300 of- consultant in Germany and is a leading broker firm in
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fices in 100 countries thanks to our Funk Europe. Founded in Berlin in 1879, the company today
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Alliance network. has 1,360 employees . As a provider of risk management
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solutions, Funk supports companies from all industries
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Copyright: 2021, Funk International Insurance Broker and Risk Consultant.
Insurance markets are influenced by many factors and are constantly changing. This
publication provides Funk’s perspective as of the date of publication (see title page).
Publisher: Funk Group, Valentinskamp 20, 20354 Hamburg, Germany;
tel. +49 (0)40 359 140
Editorial team: Dr Anja Funk-Münchmeyer (Editor-in-Chief), Ralf Becker and the news
desk team – see photo on the right: Dr Alexander Skorna, Nadine Benkel (middle),
Sarah Seyfried; graphics: Hauke Kaden
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