Financial Supervisory Authority’s interpretation on the insurability on administrative fines and penalty payments

The Financial Supervisory Authority (FSA) has recently published a statement regarding the insurability of both criminal and regulatory fines and penalties. According to the FSA’s interpretation, the provision of insurance coverage in respect of corporate administrative fines and penalty payments, which are deemed to be punitive payments, is contrary to good insurance practice and is therefore not permitted in Finland.

The FSA’s interpretation on insurability of punitive payments covers all criminal and regulatory fines and penalty payments regardless of the cause of such punitive payment and irrespective of whether they are imposed on the basis of a deliberate act, omission or negligence.

The FSA’s reasoning is that insuring such risks could in some events encourage companies to act without regard to regulatory compliance and weaken a company’s obligation to comply with the applicable legislation and regulations. The FSA also believes that insuring punitive payments and sanctions would not be in line with the socially accepted values.

The FSA’s statement clarifies conclusively that warranty & indemnity insurance policies in respect of Finnish transactions should not be extended to cover any corporate fines or other punitive payments. The question of the insurability of fines has arisen particularly in the context of the EU’s new General Data Protection Regulation (GDPR). W&I insurers should consider the effect on W&I policy wording and discuss the effect of the FSA’s statement with brokers arranging W&I insurance for Finnish targets and transactions. The effect of the FSA’s interpretation on the insurability of different interest and penalty payments imposed by the Tax Administration due to the late payment of taxes, tax adjustment or tax increases will have some further clarification to determine whether such fines and penalties are also covered by the FSA’s statement.

Further updates and information: HPP will update clients on the outcome of the updates on the FSA’s position on insurability of punitive penalties.

HPP’s has a market-leading team advising underwriters looking at underwriting Finnish M&A deals and insuring tax risks and HPP’s experts would be happy to assist on all legal issues in Finland related to insurance and specifically W&I insurance.


Andrew Cotton
+358 45 657 57758

Anna Lehtomaa
Associate / Tax
+358 50 567 5979


Share content

Read also