Liability exposures for companies around the world are increasing. Factors such as rising litigation, collective redress and large court verdicts, costly and frequent recalls in the automotive and food sectors, the disruptive impact of civil unrest and riots in a growing number of countries, and environmental concerns such as indoor air quality and higher fines and remediation standards will likely impact businesses and their insurers in future – all in the face of a challenging global pandemic, according to a new reportfrom Allianz Global Corporate & Specialty (AGCS) which highlights five trends for the sector.
“Pricing in the liability insurance market may have turned in recent months, however social inflation trends and large court verdicts continue in the United States. This combined with expanded exposures for non-US companies doing business in the US and an increase in automotive part recalls are putting pressure on liability insurers,” says Ciara Brady, Global Head of Liability at AGCS. “Overlay this with the uncertain economic outlook, political instability and unknown impacts from coronavirus and this is creating a challenging market for clients, brokers and insurers alike. ”While we have to react to new loss trends in underwriting, AGCS remains committed to supporting our clients with solid risk transfer solutions and capacity to address today’s liability exposures. While we have to react to new loss trends in underwriting, AGCS remains committed to supporting our clients with solid risk transfer solutions and capacity to address today’s liability exposures.”
Social inflation in the US and rise of collective redress globally
Social inflation is a phenomenon especially prevalent in the US, driven by the growing emergence of litigation funders, higher jury awards, more liberal workers’ compensation claims, as well as new tort and negligence concepts.The median settlement amount of the top 50 US verdicts from 2014 to 2018 nearly doubled from $28mn to $54mn.
Rising automotive repair and recall costs
In recent years there has been a growing number of recalls in the automotive industry in both the US and Europe.
Costly food safety risks and recalls
Food recalls are on the rise globally due to factors such as global manufacturing, fewer suppliers in complex supply chains, enhanced regulatory scrutiny, as well as improved technology which allows for better traceability and pathogen detection.
Riots and civil unrest threaten beyond physical damage
The “yellow vest” protests in France, civil unrest in Chile, Hong Kong and Bolivia and most recently the racially-charged riots in the United States are high-profile examples of the rise of civil unrest globally: Political violence increasingly causes property damage, disruption and loss of attraction and revenues to many businesses.
Indoor air quality after coronavirus
Environmental pollution incidents can have damaging consequences for a business – two risks are particularly paramount: indoor air quality concerns with legionella and mold growth and, secondly the increasing risk of environmentally-driven prosecutions, fines and remedial actions, as public awareness for pollution and natural capital depletion grows.