ANYONE doing business in the United States is sure to get caught up in its legal system eventually, and could find themselves a target for shareholders and other lawsuits in the US courts, the chairman of Lloyd's of London insurance market said in Dublin last night.
Lord Levene told the annual dinner of the Institute of Directors that the Irish government has set an example for other European states to follow in trying to contain compensation costs, but the problem was now a global one.
"Ireland was fast turning into the lawsuit capital of Europe a few years ago, with a negative impact on its business reputation, but much has been done to improve the situation," he said.
He said business leaders must
do more to adopt a united
"Tort costs are expanding around the world at twice the rate of the global economy. Added to this is the fact that US legal jurisdiction is trying to creep outwards."
He said business leaders must do more to adopt a united front and lobby for change in compensation law as and when necessary.
"It is a burden on the whole economy, which stifles innovation and risk-taking everywhere."
Lord Levene said the world in which people find themselves living and doing business is the most rapidly changing and most challenging in Lloyd's 300-year history.
"Today's directors are spending up to four times as much time dealing with risk issues as they were even three years ago."
But he believed they were still not fully aware of the risks, such as climate change. "By 2050, mega-catastrophes like Hurricane Katrina, which used to occur every 100 years, are predicted to happen once every 25. The UN predicts that losses will be 900pc higher than they are today.
"Climate change should sit at the heart of our corporate and social responsibility strategy. We can use our influence to encourage 'climate-proof' behaviour from the boards of the large corporations in which we invest or with which we do business."
He said Ireland is the fifth-largest European market for Lloyd's, with total annual premiums of over ?300m.
Among the items it insures are Croke Park, the Dublin Port Tunnel, the Irish rugby team and golfer Padraig Harrington's arms.