ILA Leadership Profile: Philippe Goutière
Directors and officers (D&O) liability insurance is now an important part of most board member’s toolkits in Luxembourg. It wasn’t always the case, and raising awareness about this had been one of ILA’s key early tasks. Local insurance professional Philippe Goutière was central to this effort from the early days.
D&O liability insurance seeks to protect directors financially in the event of legal action over accusations of mismanagement, non-respect of laws or regulations …. Board members with direct professional links to the firm most often benefit from insurance provided internally. Yet is this sufficient? What about after they leave the firm, are they still covered? What about independent directors? Can they be included under corporate schemes, or are they best served taking out their own cover? It was one of ILA’s early tasks to help members understand and respond to these questions.
It can be too easy for corporate governance professionals emersed in the details of their companies and specialisations to ignore this important topic. Hence raising awareness was one of the late Patrick Zurstrassen’s earliest steps as ILA’s founding chair. He started working with Philippe, then the general manager of the Luxembourg office of the global insurance giant AIG. “After ILA was founded and started to grow steadily, at AIG we saw this was a network we needed to work with and expand our relationship,” Philippe noted.
Discussions between ILA and AIG began in early 2008, they soon reached agreement. AIG would provide basic D&O insurance free of charge to members, in exchange for the firm having access to members to offer more comprehensive coverage. This included Philippe and others giving talks to members to explain the risks and different D&O protection options.
“In early 2008 when we started working with ILA, D&O was not widely used in this country outside large corporates and some investment funds,” Philippe said. The atmosphere changed considerably with the global financial crisis, including high profile scandals like the Madoff case. The free basic cover for members had already raised awareness of the concept, and these events provided clear case-studies of its usefulness. “There’s not quite 100% cover in Luxembourg now – either through corporates or individual policies – but it’s pretty close to it,” Philippe added.
Insurance corporate governance
Philippe is now an individual ILA member himself, and is on the institute’s Insurance Commission. In 2016 he set up his own company, ABIL, to provide risk management and insurance brokerage services. He also has independent directorship mandates: he is a conducting officer with an reinsurance company and is also on the board of the charity Médecins Sans Frontières in Luxembourg.
Work of the Insurance Commission has been stepped up in recent months. For example they are reviewing the booklet on governance for insurance and reinsurance companies, with this due for publication in October. Work is also on-going to firm-up the relationship with the industry regulatory, the CAA. There had been plans to organise an ILA breakfast briefing, and possibly a larger seminar on insurance-related topics sometime this year, but for obvious reasons these developments have been put on temporary hold.
Not for profits, startups
Philippe is also able to offer useful insight from the not-for-profit and startup sector too. “MSF has a medium sized office here, but globally it is very large and in many ways its organisation is very professional, with little difference from a commercial enterprise in terms of organization and controls, even the purpose is different,” he noted. While there is a different atmosphere in dealings with colleagues and third parties, the need to provide value to donors is akin to the requirement to ensure the promotion of shareholder value.
He also warned about personal liability risk within asbls. “Just because you are there for humanitarian reasons and you know you are working with the best of intentions, there is still compliance risk with charities and associations,” he noted. Similarly for startups, here too there can be a lack of awareness. “Their focus is on their business and generating growth, and they don’t think of embedding risk management from the beginning,
Overall, Philippe is impressed with the growth of ILA in his years dealing with the institute. “I am in many organisations and ILA is the most valuable in terms of content, services and building a network,” he said.