DAC Beachcroft partner William Allison on insurance implications
The Volkswagen emission scandal cost could top that of Libor rigging and have pricey insurance implications, according to DAC Beachcroft Global Insurance Group partner William Allison.
The German car manufacturer is accused of manipulating diesel cars in the US to falsely report lower emissions.
But if Volkswagen is proven to have sold its doctored cars in other countries then the cost could trump the cost of the Libor rigging scandal, according to Allison.
“It doesn’t seem that it will be limited to the US,” he said.
“I think if it is proven that the issue is bigger than just the US, then the cost will be more than Libor,” he added.
The Libor-rigging furore has led to fines of more than $9bn for the banks involved.
Volkswagen chief executive Martin Winterkorn has already announced his resignation over the issue and the company is facing legal action and product recall issues.
This cost is also likely to spill over into insurance claims, particularly directors & officers liability and product recall, according to Allison.
“There could be large actions from shareholders against the company, potentially against the directors,” he said. “The environmental agencies can bring claims for breaches. There could also be product recall claims for all of the affected vehicles.
“So they are pretty wide ranging, the sort of claims that can be brought against VW and its directors and officers.”
The car maker has already been told to recall around 500,000 US vehicles by the Obama administration, faces potential fines from the US government and has already had a class-action lawsuit filed against it.
For more on this topic, read our in-depth analysis of the insurance implications of the Volkswagen emission scandal this Friday.