UK professional and management liability insurance claim notifications have risen steadily over the last decade and remain four times higher than pre-financial crisis levels, according to research by Marsh.
In its report, “Professional and Management Liability insurance claims: Common pitfalls for unwary policyholders”, published today Marsh looks at claims against the professional and management liability policies of its UK clients between 2005 and 2015, and the main causes of declined claims.
According to Marsh, between 2005 and 2007 the firm recorded an average of 200-300 directors and officers (D&O) liability insurance claim notifications. With the onset of the financial crisis, claim notifications rose by 75% to nearly 500 in 2008, before peaking at 1,685 claim notifications in 2012. Since 2013, Marsh has received, on average, approximately 1,300 D&O claim notifications in the UK annually, a four-fold increase on pre-financial crisis levels.
“The increasing volume and complexity of regulatory activity in the UK and the European Union is a major driver of this upward claims notification trend,” said Robert Lewis, Claims Leader, UK Risk Management Practice, Marsh. “There is also an increasing level of cross border co-operation among regulators and a shift towards class or collective actions across EU member states.”
While less than 1% of financial lines claims made by Marsh’s UK clients were declined by insurers between 2011 and 2015, 39% of these declined claims resulted from a failure to notify in accordance with policy requirements or timeframes, or at all, followed by the claim being subject to a policy exclusion, at 31%.
“Organisations should review the terms and conditions of their policy wordings as soon they are received, not simply when a claim is first made, or worse, once it has developed or settled,” added Mr Lewis.