Australian Side C claims have garnered international attention with insurers “very cautious” on renewals, an expert has said.
John Donnelly, head of placement, Asia and Pacific, at Marsh, said that the firm expects Side C pricing to continue to rise in the D&O market, as class action claims impact the sector.
“We expect Side C pricing to continue to increase on the back of more class action claims,” Donnelly told Insurance Business. “This market is not suffering from a lack of capital; it is merely that total claims have been exceeding the total market premium by a good margin and premiums are now being adjusted to compensate for the claims.
“These claims have now gained a significant international profile in the industry so all major carriers are taking a very cautious approach to renewals.”
The recent Marsh Global Insurance Market Index for the fourth quarter of 2017 saw financial lines pricing in Australia rise by 16% on average, the highest average rise of any insurance line in the world. Indeed, late last year, a white paper released by XL Catlin and Wotton + Kearney found that, since the first securities class action in Australia was settled in 2003, settlements have now exceeded $1.5 billion.
The white paper noted an upward trend in the number of class actions covered as part of Side C on a D&O policy, with 2016 seeing an all-time high of nine actions filed or announced. Data on 2017 is, as yet, unavailable.
With a host of new class actions suits mooted against major Australian banks, thanks to their sale of credit card insurance products, claims show no signs of slowing down in the market.
