Four-Fold Increase in UK D&O Claim Since Financial Crisis: Marsh Report

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Four-Fold Increase in UK D&O Claims since Financial Crisis: Marsh Report

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, a leading global insurance broker and risk adviser, and a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. (NYSE:MMC).

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.

About Marsh

Marsh is a global leader in insurance broking and risk management. Marsh helps clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. Marsh’s approximately 30,000 colleagues work together to serve clients in more than 130 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and people. With annual revenue of US$13 billion and approximately 60,000 colleagues worldwide, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a leader in providing risk and reinsurance intermediary services; Mercer, a leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a leader in management consulting. Follow Marsh on Twitter, ; LinkedIn; ; and YouTube.

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