D&O claims on the rise as crisis heads down under
An increase in litigation and regulatory action resulting from the global financial crisis is expected to result in hefty directors’ and officers’ (D&O) claims in Australia.
Leading insurance lawyer Oscar Shub, a partner at Allens Arthur Robinson, says more class action suits by groups of people affected by the economic downturn are likely.
He told insuranceNEWS.com.au more than 120 subprime-related securities class actions have been filed in the US, leading to D&O claims that could cost insurers $US6 billion ($9.2 billion).
“I don’t think we can expect to be immune,” Mr Shub said. “We will see a growth in the number of claims relating to the global financial crisis.
“Insurers are going to be more stringent about their underwriting, and be looking for good risk management, but I don’t think their capacity is drying up. They have significant capacity available to them in the market.”
But while there may be little difficulty getting D&O cover, premiums for high-risk business will increase.
“Anecdotally there’s a significant increase in the number of reported circumstances being notified to insurers,” he said. “It would seem more and more notifications will turn into claims. And when they do the insurers are going to have to deal with them.”
Leading insurance lawyer Oscar Shub, a partner at Allens Arthur Robinson, says more class action suits by groups of people affected by the economic downturn are likely.
He told insuranceNEWS.com.au more than 120 subprime-related securities class actions have been filed in the US, leading to D&O claims that could cost insurers $US6 billion ($9.2 billion).
“I don’t think we can expect to be immune,” Mr Shub said. “We will see a growth in the number of claims relating to the global financial crisis.
“Insurers are going to be more stringent about their underwriting, and be looking for good risk management, but I don’t think their capacity is drying up. They have significant capacity available to them in the market.”
But while there may be little difficulty getting D&O cover, premiums for high-risk business will increase.
“Anecdotally there’s a significant increase in the number of reported circumstances being notified to insurers,” he said. “It would seem more and more notifications will turn into claims. And when they do the insurers are going to have to deal with them.”