Ledelsesberetningens betydning for dækning under en bestyrelsesansvarsforsikring

Jón Eydunsson á Borg

Student thesis: Master thesis


Following the financial crisis several banks in Denmark went into liquidation. As a result of this the Danish state has sued the former boards and managements in several banks for damages. These are substantial claimes. The basis of this master thesis is a pending case, where the former board of EIK Bank Danmark has been sued by the Danish State for the loss, following the liquidation of the bank. Normally the boards have taken out an insurance policy, covering board liability, however in the case scenario, that is the inspiration for this thesis, the insurance company has refused to cover the claim. The reason for doing so is that alleged misrepresentation, as the annual reviews in the annual reports, which have been a part of the material, used by the insurance company to draw up this particular insurance, was faulty. The annual review in the annual reports were in fact faulty, however it is very unusual, and actually never seen before, that an insurance company claims misrepresentation on the grounds of information in the annual review. Section 4-6 in the Danish Insurance Agreement Act the policy holder has a duty to answer any questions the insurance company may find relevant to ask, when the insurance policy is drawn up. Likewise the policy holder has a duty to disclose any information relevant to the insurance company pursuant to section 7 in the Danish Insurance Agreement Act. The analasys shows that the information i the annual review is not part of the duty to answer under section 4-6. The information is more likely to be defined as a part of the duty to disclose pursuant to section 7, as the insurance company has not specifically asked questions regarding this particular information. In order for the insurance company to refuse to cover the claim subject to section 7, the policy holder must have shown gross negligence by not giving the information. Furthermore the information must be relevant and be of utmost importance to the risk assesment. Although it could appear that the annual review in the case is covered by the Danish Insurance Agreement Act section 7, it is still not clearly covered as well as it lacks support in case law and in the procedures of the insurance companies in Denmark. In the economic part of the thesis, the problem is treated from a law and economic point of view, where I am looking in to when it is economically efficient for the insurance company to be entilted to refuse coverage. Here it shows that when it is very likely for the mispresented information to be discovered, the insurancy company should not be allowed to refuse to cover. Furthermore the value of alpha is significant for whether the claim should be covered or not, as a low alpha increases the probability for bad faith and gross negligence. Thus the company should be allowed to refuse coverage when the duty to disclose subsject to section 7 has been breached due gross negligence, and should not be allowd to refuse covereage when the oligation is breached due to simple negligence.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2014
Number of pages81