Risk Partners Life Sciences Roundtable 2025, thank you very much! 

OLG Schleswig: Limitation of the liability claim
in the case of a direct claim in the D&O insurance.

There is a new, exciting ruling from the world of D&O insurance. We recently reported on the decision of the Higher Regional Court of Cologne in the context of direct action. Now the Higher Regional Court of Schleswig has also made a groundbreaking decision.

What was it about? The focus was on the question of the statute of limitations. However, it must be borne in mind that the question of the limitation period in D&O claims is not trivial. On the one hand, there is the original claim for damages (statutory directors' and officers' liability separate from the D&O insurance) as well as a claim under cover law that arises between the parties - insurer, insured persons and insured companies - due to the conclusion of the D&O insurance. Now both the claim for damages and the contractual claims under the D&O insurance can become time-barred. If the limitation period for the claim under cover law is now suspended by filing a direct claim or a direct action with the insurer, what does this mean for the necessary liability claim? Can an insurer release itself from liability in this case if the claim is already time-barred? The decision of the Higher Regional Court of Schleswig has now clarified this question.

Background: A fire in a bakery caused considerable damage, of which the fire insurance only covered part, justifiably due to the contractual conditions. (Note: We therefore recommend regularly documenting and reviewing the sums insured and the content of the insurance cover). The operator of the bakery claimed the remaining loss by holding the managing director liable for breach of duty. As a result, the managing director assigned his claim for indemnification under the D&O insurance policy to the company (see the attached diagram). D&O insurance usually covers a company's executives. In the event of a claim, claims must first be asserted against the insured person before they can be enforced against the insurer. This often results in complex and time-consuming liability and coverage disputes. In practice, the dispute is increasingly being conducted in direct proceedings by assigning the insured person's right to indemnification to the policyholder. This allows the policyholder to assert its claims directly against the insurer. The decision: In its ruling of 26.02.2024(case no. 16 U 93/23), the Higher Regional Court of Schleswig stated that this assignment of the right to indemnification constitutes a "truce agreement" (pactum de non petendo) was implicitly concluded. This agreement prevents liability proceedings against the managing director as long as the claim against the insurer exists and suspends the limitation period for statutory liability claims. The suspension under cover law by filing a direct action or a direct claim with the insurer therefore also suspends the statutory limitation period.

The ruling by the Higher Regional Court of Schleswig fundamentally strengthens the position of companies that wish to take direct action against their D&O insurers. It deprives insurers of a further opportunity to reject claims without an indemnification. This makes it more attractive to take direct action against the D&O insurer rather than against the responsible managers. In addition to the transfer of control by the manager concerned, especially in the case of an assignment on account of performance in accordance with section 364(2) of the German Civil Code (BGB), there are other aspects to consider. These include, for example, the effects on public limited companies under the strict AG regime and, in principle, the disadvantages associated with the "direct action", such as contractual insurance obligations in the event of a claim. For this reason, Risk Partners will continue to closely monitor developments relating to direct action on behalf of our clients. We at Risk Partners will stay on the ball for you.

Also read our other blog posts

Being Public

Earnings Call: one 0 too many - the Lyft CEO mistake

"Look, it was a bad mistake, and that's on me," CEO of LYFT Inc. The incident and possible insurance coverage. You may have also heard about the recent incident with LYFT. In the quarterly earnings report, LYFT originally stated that profit margins were up 500 basis points before correcting this to 50 basis points during the conference call. This clerical error caused the stock price to rise more than 60% in after-hours trading. This situation is exactly what investor relations teams that

Read more "
Being Public

Prospectus liability insurance (POSI): Risk Partners publishes for you

Risk Partners on Going Public and the capital market blog on prospectus liability insurance In recent months, we have been able to share our expertise on prospectus liability insurance with a wide audience on two renowned platforms. Here is an overview: Kapitalmarkt.blog In the article "POSI insurance - The protective vest on the capital market", we explain why prospectus liability insurance is an indispensable tool for companies becoming active on the capital market. The article shows in a practical way how such insurance not only minimizes liability risks, but also strengthens investor confidence. GoingPublic Magazine In

Read more "
Risk Partners

13th Hamburg Financial Lines Forum

Risk Partners at the Financial Lines Forum 13th Hamburg Financial Lines Forum. On October 12 and 13, 2023, the 13th Hamburg Financial Lines Forum took place with the participation of Risk Partners, a traditional event that once again served as a platform for the exchange of current trends. The program began with an overview of current developments and the handling of claims in financial lines, presented by Gabriele Schreiber-Sahin and Michael Hendricks. Dr. Oliver Sieg then shed light on directors' and officers' liability and the

Read more "
Life Sciences

Finance Day 2023

Growth capital for biotechnology: Yesterday, today, tomorrow! A few days ago, Jutta Zaglauer and Florian Eckstein from our team attended the Finance Day 2023 on the occasion of the 25th anniversary of biotechnology at the IZB - Innovation and Startup Center for Biotechnology. The event offered an exciting exchange and insights into current financing and capital market issues of biotechnology companies. As an experienced specialist insurance broker for the areas of life sciences, venture capital and IPOs, all three cornerstones of our "magic expertise triangle" were part of the exciting agenda. It was also interesting to discuss the importance of customized

Read more "
Management

Research breakdown at Stockholm's Karolinska Institute: A cooling failure destroys cell cultures from decades of research

Research mishap at Stockholm's Karolinska Institute: A cooling failure destroys cell cultures from decades of research - can you insure against it? An incident that threatens your very existence, but which we would like to shed some light on from the perspective of an insurance broker specializing in life sciences. What happened? A cooling system at the Karolinska Institute in Stockholm, Sweden's most important medical research center, failed for five days. Biological material that had been collected over 30 years and, according to the institute, was unique in the world, was destroyed as a result. The material was stored in deep-freeze tanks in which the temperature

Read more "
Life Sciences

Finance Day 2024

Growth capital for biotechnology and life sciences - Finance Day 2024 A few days ago, Jutta and Florian from our team attended Finance Day 2024 at the analytica trade fair in Munich. The event once again offered exciting expert panels on current financing and capital market issues for life sciences companies. As the panels focused on three of our key consulting areas, namely life sciences, venture capital and IPOs, attending was of course a must for us as a specialist insurance broker. Our team was also very pleased to meet many of our partners and clients again.

Read more "