CONTINGENT (SPECIAL RISK) INSURANCE.
During the Due Diligence process, a special risk could be identified which may have the ability to become a “roadblock” in the risk allocation process. For instance, neither the sell-side nor the buy-side may be willing or able to bear this specific risk. Without an agreement on this point, negotiation would stall. With a Special Risk Insurance Policy, the risks can be transferred to the insurer, allowing the negotiation process to continue and the transaction to proceed. Ultimately, it can guarantee a clean exit for the selling party.
WHAT INFORMATION DO WE REQUIRE?
Our specific requirements will depend on the risk, but in general we require information showing:
■ Description of the underlying facts and circumstances (the background)
■ Description of the risks (potential liability) arising out of those facts and circumstances
■ Underlying documents of the litigation, permit, contract or whatever the subject is
■ Legal analysis of the likelihood of the risk(s) materializing (risk rating)
■ Calculation of the maximum risk exposure (quantum of the risk)
■ Detailed explanation and analysis of the technical defence available should a claim be brought
■ Any opinions or notes from the insured’s advisors or counsel and a declaration/ representation of all material facts