The number of class action lawsuits continues to rise in Australia, placing the Side C D&O market front of mind for many in the insurance industry.
As the second most litigious jurisdiction for companies facing securities class actions behind the US, Emily Yin, national technical claims manager at AJG, said that class actions in Australia “are here to stay” as Side C claims issues show no sign of slowing down. Thankfully, she believes that insurers are starting to grasp a clear understanding of the market as claim numbers grow.
“From the claims point of view, insurers are becoming more sophisticated so they understand the legal issues much more clearly and are tackling the losses much better than they were perhaps 10 years ago,” Yin told
Insurance Business.
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Yin did say, however, that one insurer had already withdrawn from the primary Side C market completely. However, other insurers and underwriters are adjusting their offerings as demand still exists for the product.
“On the placement and underwriting side, with the level of claims coming through… there is certainly a demand for it and I can’t see there being no Side C cover at all. “I think the market will change but I think it will still be there.”
Yin said that historically there were anywhere between six to eight class action filings per annum but the first quarter of this year saw four filings alone. The most common Side C actions relate to
breach of continuous disclosure obligations as these offer the most formulaic claim, Yin said. In addition, she stressed that insurers and brokers play a key role in educating clients.
“By now a lot of the major insurers have had some exposure to Side C claims and I think the key is to educate the insureds, or our clients, and the industry on a lot of the common pitfalls that lead to these types of claims,” she explained.
Yin added that brokers can look to keep clients updated on trends within the Side C environment as insureds need to understand the rigours of working in the heavily regulated ASX-listed market.
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