Continuing litigation related to the COVID-19 pandemic could prompt more liability insurance exclusions, Marsh warns in an Australian market recap.

London markets have been more restrictive on coverage via coronavirus related exclusions, while as of the end of last year local markets had continued to provide cover without major changes.

“For insureds, relevant and quality information is critical in articulating and supporting their respective risk mitigation approach to help achieve a favourable renewal outcome with insurers,” Marsh says.

“In the event of ongoing COVID-19 related litigation, insurers are likely to impose COVID-19 exclusions.”

Overall, insurers are expected to continue increasing liability rates, limiting capacity and reviewing coverage well into this year, Marsh says in the Casualty (Liability) Insurance Market report.

Insureds with North America or catastrophe exposures, such as for bushfires, are already facing tougher conditions, while January 1 treaty renewals saw a greater-than-anticipated increase in reinsurance costs for direct insurers, the broker says.

“These costs will be passed on to insureds in renewal pricing, which we expect to see in the first quarter,” Marsh says.

Capacity limits are now more commonly capped at $10-20 million, whereas insurers in the recent past would comfortably deploy up to $50 million, while when it comes to excess layer pricing, some specific cases have seen increases from $300 per million of cover up to $1500-$2000.

In professional indemnity (PI), where cover is included under public and products liability policies (PPL), insurers are reducing or removing PI in an effort to actively manage and prevent PPL policies from being eroded by PI claims.

The report says intense public and regulatory scrutiny related to sexual harassment and abuse, such as through the Me Too movement and the Royal Commission into Institutional Responses to Child Sexual Abuse, has had an effect on the liability insurance market.

Most insurers no longer offer sexual molestation cover under traditional liability policies and standalone policies are rare, both locally and globally.