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In this article, Diya Gupta interviews Cheryl Sweeney, a qualified UK and US attorney, who has worked in the UK for several years and currently acts as Legal Director for a global group of insurance companies, QIC Global. Cheryl looks back on her diverse career, provides advice for aspiring solicitors and showcases the distinctiveness of working in the insurance sector as a lawyer.
[Note: QIC refers to the ultimate parent company, Qatar Insurance Company and we refer to our international division as QIC Global]
Hi Cheryl! Could you begin by explaining why you decided to study law?
I came to the end of my four years of at university and I wasn’t sure what I wanted to do, after studying international politics and Russian. I decided to apply to law school because I believed the degree would help me develop skills important to any career – how to think analytically and critically, how to draft effectively and communicate well.
How did you begin your legal career and get into the insurance sector?
I qualified as a lawyer in New York and started working in the insurance industry in the late 80s, when insurance companies were developing in -house legal teams to manage the very high value and complex multi-district litigation involving the clean-up of environmental waste sites and diseases from asbestos. The US Environmental Protection Agency had passed a piece of legislation commonly referred to as Superfund which made companies retroactively liable for environmental clean up and related costs. This meant that companies who were found to have contributed towards any form of environmental or toxic waste at any point in their history could be liable for these very expensive clean-up costs, even though it had occurred many years in the past. Suddenly it seemed that every company in the US was worried about being involved in environmental waste sites where their products might have been dumped even without their knowledge. Only the biggest companies could could afford to pay for their share of these costs on their own: everybody needed to reach out to their insurance companies.
My first job was with AIG, where I handled environmental claims litigation and was also working with underwriters to develop insurance policies that would provide insurance coverage for environmental damage. For example, for gas stations to cover clean up costs relating to leaking underground storage tanks. I then moved to the New York office of the British law firm Alsop Wilkinson (the A in DLA Piper), and became more involved on the reinsurance side, as the insurance companies themselves looked to their own insurers – reinsurers – to reimburse them for these same claims. Many of these reinsurance policies had been placed in London and the London market was starting to face a huge amount of reinsurance and insurance claims which they were not necessarily prepared for. I was involved in litigation and arbitration for many different reinsurance companies who had North American liabilities. This often involved conducting audits and inspections of the claims, underwriting and financial records of the US insurance companies.
Why did you begin practising in the UK?
I came to London for three or four months to work on the discovery of a major insurance case, Pine Top v Pan Atlantic, and ended up staying for personal reasons. I moved from New York, and I was able to continue working in the insurance industry since London is a major hub for the international insurance and reinsurance industry. At that point, I shifted from private practice into in-house practice, which I felt was easier to manage since working as an associate in a New York law firm involved working till 2/3am almost every day – which wasn’t sustainable for me.
Over the past 25 years in London, I have worked in different parts of the insurance industry including audits and inspections for Compre and Swiss Re, and for the past 15 years as Head of Legal / Legal Director for CNA Hardy and now QIC Global. QIC Global is the umbrella name for a multinational group of insurance and reinsurance companies including Qatar Re in Bermuda, QIC Europe in Malta, a group of motor insurers in Gibraltar, and the Lloyd’s managing Agency, Antares which also has an underwriting company in Singapore.
How does working as an in-house legal director compare to being a solicitor or attorney in private practice?
Working in-house covers a broad range of legal and commercial matters – your client is literally sitting next to you every day and you deal with everything and anything that comes up ranging from a very specific question or issue to advising on strategic approaches and commercial objectives. When working in-house in an insurance company, you’re not just dealing with the underwriters or claims teams on the technical insurance issues, you’re also dealing with all the commercial things that any company will deal with – employees, office leases, IT systems, contracts for licences and software, and the corporate side as well including mergers and acquisitions and company secretarial matters – board meetings, resolutions and minutes. There is also a lot of interaction with the Compliance team on regulatory issues, sanctions and data privacy. Thus, it’s quite a broad role, dealing with lots of different kinds of in-house clients as every department, every person in your company is your client along with the company itself. This contrasts with my experience in private practice as a young associate where my client contact was limited and all my work was given to me through one partner and focused on specific issues or questions he had.
How does the US legal system contrast to the UK’s?
One thing I really like about the UK system is the approach to hands-on practical training as a mandatory component of the solicitor qualification. I was a little envious that my colleagues in the UK law office were able to spend six months in four different departments within the law firm, getting hands-on-experience under careful guidance of experts. In the US, it is not like that at all: you graduate from four years of university, go on to three years of law school where you receive a Juris Doctor degree and then you – hopefully – pass the bar exam in a particular US state. After this, you’re qualified to practice law and can go out the very next day and hang up your shingle and start representing anybody. This is a little scary if you have no experience at all. Just because you are able to pass exams in university and law school and then the bar doesn’t mean that you know what you’re doing in practice.
In the UK, there’s a little more focus on making sure that people can demonstrate a wider range of skills across different subject matter, which is probably more useful as a young lawyer as it gives you more exposure to different commercial industry sectors and the type of work that would be done.
What distinguishes the insurance sector and what made you stay?
I think that the insurance and reinsurance industry is really a fantastic industry for anybody to work in. Lots of people think they know all about insurance through their own experience with car insurance or home insurance. But that is just a tiny part of the whole industry. Once you’re involved in it, you can see that there are many different avenues that you can pursue based on your interests – whether you enjoy travelling and working with lots of different people helping to solve their problems, or if you enjoy working more intensely on your own reviewing complicated contracts or mathematical sums and exposures to different types of risks like political strife and the climate. You could become an underwriter, a broker, a claims handler, or a contract-wording specialist. There are lots of different areas where a legal background would really assist and be of great use in addition to being a lawyer in the Legal Department, so I think it’s a very flexible sector well suited to the skills and experience of a lawyer.
Additionally, insurance is worldwide and a truly international fraternity of industry professionals. I think I got lucky falling into the world of insurance. I didn’t plan to work in any particular sector – after passing the New York bar and moving there from Washington DC, I just took the best job that I could find as soon as I was there. I have enjoyed all of the different roles I have had within the world of insurance and reinsurance, and I continue to grow within that industry sector as it is constantly changing to meet the emerging needs and issues facing international business.
Out of all your different roles, what has been your most interesting or challenging position?
I think claims was the most challenging because you’re deciding whether a claim was actually covered or not under the policy, and that decision could have a very material impact on the person or company. In the environmental claims team, I was handling extremely high value claims worth millions of dollars, and that could affect the company and its ability to trade. It was very important to make sure the decisions made were correct and supported by the policy wording and the specific facts. Also, all these claims were being litigated, so we were setting legal precedent that other insurance companies and claimants were going to read about and apply. My colleagues and I were very aware that we were making decisions that were going to have a wider impact than just that one claims decision.
That experience impressed on me how important it is to make the right decision based on contract wording, and that insurance companies must be really careful about their insurance policy wordings to be fair and transparent to the person or company that is buying the policy. When I joined the insurance industry, it was moving from the past where business insurances had been arranged on a handshake almost. That started to change when insurers were asked to cover claims they never imagined would arise and the costs of those claims were just astronomical. Now we can see that customer fairness and clear policy wordings are actively regulated by the financial services regulator, the Financial Conduct Authority. I feel like I’ve been part of beginning of that journey and I can now see how the whole industry has changed, as a result of these early experiences with environmental claims and also the issues that London market companies had with delegating their underwriting and claims handling authorities.
Having had so much experience in both the insurance and the legal sector, which do you then think has been impacted to a greater extent by the pandemic?
Well, insurance companies had to adapt to the pandemic right away because it affected not only them as a company with their own offices and employees, but also all of their policyholders. It was important to make decisions based on the policy wordings but COVID-19 was not like any pandemic we had seen before and once again the insurance industry was dealing with something new that in some cases they had not intended to cover and had not charged premium for. The FCA decided to step in and handle the emerging coverage disputes with a test case which was a novel legal procedure. That test case was appealed and that decision left some grey areas which are now being dealt with through complaints with the Financial Ombudsman and also further litigation and arbitration.
What we’re seeing is that these unexpected events that actuaries consider might happen once in every 200 years are happening much sooner. Insurance companies must think about that in terms of the reserves they carry and how they manage their own commercial risks including the kinds of insurance business they underwrite. Emerging risks present a great opportunity for insurance companies to evolve the types of products they offer so this is also an exciting time in the insurance industry. For instance, it gives an opportunity for some people to offer very specific cover of insurance that only applies if there is an epidemic, or pandemic. Cyber crimes are also a very interesting risk. Policies covering various types of cyber losses have been around for several years now but the insurance market is still evolving in response to the different types of claims we are seeing.
In your opinion, what is the key to being successful in the legal-insurance industry?
I think any one can be successful in the industry, but its important to work out the type of position or role that you pursue. There are people who like to go out and deal directly with clients and negotiate insurance programmes or distribution deals and people who are happier doing more technical work on their own, analysing risks and doing maths or reading long and complicated contracts.
It depends on your personality, but if you enjoy contracts, this industry needs more of you. Someone successful is able to sit down and read through a very long agreement, and make sure that they actually understand what it means and that it says what the underwriter thinks it means too. It helps to think about how the terms and conditions would apply in real life, and this where talking to someone in the claims team can help too because they have seen all sorts of examples. A skilled lawyer would be confident in talking to their underwriting and claims colleagues and bringing them together to be reflected in the agreement, since these teams are two sides of the same coin but do not necessarily deal with each other when drafting the policy.
As a young lawyer who hasn’t had a lot of commercial job experience, you need to really educate yourself about the industry sector of the clients that you’re representing.
So how do you do that? How do you do that quickly? I think one of the best ways is to go and talk to the people who are doing that job, and not being afraid to think you’re asking a stupid question.
What advice would you give to yourself as a freshman starting law school, taking your first steps into legal world?
When I was younger, I felt that I was expected to already be an expert and that I would look unprofessional if I didn’t already know the answer particularly when I was in private practice where we were being paid to be experts. In hindsight, I would have asked more questions. I would have taken people out for coffees just to get information about what they do in their jobs and listen to their war stories and learn about how different parts of the insurance industry relate to each other, because what’s really helped me make sense of things is from my experience working for different companies and seeing how people do business – how they approach the same issues, or why they might have different issues than other similar departments or companies.
I also think I was too deferential in my early career to senior partners and executive directors. I felt very much like there was a chain of command and that in meetings it would be the senior person who would do the talking. I felt that I needed to follow that chain of command in expressing my comments and opinions. Maybe that has changed over time. I know that I encourage people on my team to actively participate in meetings – they aren’t invited as window dressing. But it is important it is to have a good working relationship with your manager – to know why you are invited to a meeting in the first place – and also how important it is to understand the underyling dynamics or politics of the meeting and to know when to ask questions and offer observations and to learn to take cues from the senior people you are supporting.
Another one of the most important things really is networking. Initially, I felt disingenuous about it. I felt embarrassed going to a cocktail reception or lunch to talk to people for the sole purpose of getting a job or an instruction from them. I consider myself more of a “giver” than a “taker”. But networking is really so important and every interaction with someone is really a networking opportunity including with people you already know because you could be planting a seed for the future which you don’t even know about now. So, my advice to young people or shy people is that they can talk to someone they meet at a work or networking event about anything. There’s absolutely no reason why they have to think that they have to talk about the job or trying to get work or anything else from anyone. People hire people because they like them, and they think that they’re going to fit within the company culture and the team. Likewise, you want to work somewhere where you feel comfortable. The only way that will happen is to just be yourself and talk about whatever you think is interesting. Nobody hires a newly qualified lawyer or thinking you’re an expert. You simply cannot be an expert without some real work experience in a particular area.
Lastly, the business and financial world can be incredibly complex, filled with specialist jargon, so what could students do to overcome this?
Insurance and reinsurance loves jargon and acronyms and the same word can have different meanings depending on how it is used. Risk can mean an insurance policy or it can mean an operational risk. BI can mean bodily injury or business interruption. Every industry is like that and uses very specific jargon that you’re never going to learn unless you just get in there and start picking it up by reading, listening and asking questions. People love someone to ask them a question, and to talk about what they do. I would really recommend a secondment in an insurance company in any department, and maybe even attending some Market Association committees as a great way to listen to industry professionals talking in their normal “business speak” with their colleagues about the important issues facing them.
Even if you’re just sitting in and listening to people talking, you start to understand and pick up the jargon and get a feel for the different companies, the personalities, the issues of the day.