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Risk Radar Report | May 2022

 

Risk Radar Report May 2022

Global Insurance Law Connect (GILC) has launched its fourth annual Risk Radar report. The report pulls together the key themes from across the GILC network and gives a snapshot of the major issues that are currently bubbling up in each major insurance destination where the GILC has a presence—23 countries.

GILC member firm Sparke Helmore provided the commentary for Australia and noted that many issues that defined 2021 remain front of mind for 2022.  The top three issues that stand-out in the Australia as creating significant headwinds for the local industry are:

  • Climate change—insurability or affordability of insurance in flood prone areas
  • Regulation—Australian insurers have been subject to sweeping regulatory reforms
  • Class actions—increasing restrictions for third party litigated funders

The 2022 report sees many of the areas of focus from last year continue to be at the forefront of members’ minds.  The rise of digitisation and cyber risk, increased climate risk, and regulatory change are all themes that run through this year’s report, with insurers having to continue to adapt with 2022 being no less eventful than 2021.  Many insurers have been turning their minds to the longer-term implications of the pandemic including potential consequences for the D&O market should the decisions of senior management during this extraordinary period come under the spotlight.

The Risk Radar report covers Australia, Belgium, Brazil, China, Denmark, England & Wales, Finland, France, Germany, India, Ireland, Italy, Luxembourg, Mexico, Netherlands, New Zealand, Northern Ireland, Norway, Scotland, Spain, Switzerland, Taiwan and the United States.

Click here to visit the Global Insurance Law Connect website. Click here to download the full report.

D&O: Global trends, insurance capacity and pricing | November 2021

Global trends, insurance capacity and pricing

Global Insurance Law Connect Legal network this week launches its first research report into global D&O markets. The report has had input from insurance lawyers in 20 countries around the globe and provides an overview of global trends and also gives a snapshot of how D&O coverage shapes up country by country.  GILC member firm Sparke Helmore provided the input for Australia.

In many countries, D&O rates are rising, and in some places, those increases are extreme, but this is not the case everywhere.  In a few markets the green shoots of recovery are showing as clients reach the limits of what they are prepared to pay, and prices look set to finally stabilise. 

D&O pricing increases 30-100% across the globe

Australia is one such country where the price limit has been reached.  As Dino Liistro, Sparke Helmore Partner, comments, “The recent experience of underwriters had been that insureds were prepared to increase their spend. The limit may have been reached.  Over the last year, insureds began maintaining the same legal spend in the face of rising premiums by increasing excesses or reducing limits of cover and in some cases looking to other risk management solutions to bridge the gap.”

The report also notes other tumultuous global events beyond pricing are impacting D&O including:

  • the global surge in M&A

  • regulatory pressures

  • cyber

  • growth markets

  • environmental and ESG issues, and of course

  • the pandemic.

These issues add up to the increased need for protection for directors and officers, driving up the demand for cover.  The report found that while emerging markets in particular have a growing appetite for D&O there is a lack of capacity in many of these markets, with only a small number of insurers operating in the region. European markets also have capacity for growth with some smaller economies showing an upward trend in demand.

Meanwhile in Asia, markets such as China that have fast-growing D&O books have also seen increased securities-related litigation and in India, the basis for D&O claims has widened exponentially.

For Australia, the COVID-19 pandemic appears to have created a volatile and uncertain environment for businesses in a strained D&O insurance market.  It is anticipated however that the market will stabilise and soften over the next two years.  This optimism is attributed to (now past) increases in premiums together with an apparent slowing of certain types of claims namely, securities related litigation. 

Dino Liistro noted, “There has been a decline in securities and insolvency-related investigations and claims over the past 12 months.  Early in the pandemic, legislative changes were made in the area of insolvency, and other legislative changes and government support assisted companies.  Perhaps because of these actions there has been a decline in corporate insolvencies from pre-pandemic levels, and consequently a decline in insolvency related claims against company directors to now.  In the event of insolvencies increasing in the future, of course, we may again see a rise in insolvency related claims.” 

“Also related to the pandemic, underwriters anticipate further claims in the employment practices liability space—around changing conditions in workplaces—and in respect of policies with an element of crime cover.”

Cyber is another area that continues to be in the spotlight in Australia, as it is around the globe.  Underwriters typically consider cyber risk to be covered under D&O insurance policies; to date, there has been very limited claims activity in Australia.  Theoretically, a director’s failure to implement reasonable data protection and security controls could ground claims against them.  Dino Liistro said, “I anticipate that the risks associated with such claims will grow commensurate with companies’ increasing reliance on technology and data to drive revenues and business operations.”

As Jim Sherwood, Global Chairman of Global Insurance Law Connect, states on the report overall, “The changes of the past decade and recent economic shocks have led to an increased need for protection for directors and officers, in a market that lacks capacity to supply it.  The impact has been a notable growth in self-insuring for this class of cover, alongside increased use of letter of indemnity for directors and officers.”

Click here to visit the Global Insurance Law Connect website. Click here to download the full report.

GILC Economic Update: Pandemic rebound has further to run | November 2021

Over the past few months, Global Insurance Law Connect has worked together with Capital Economics to analyse global economic trends. As a result, GILC has launched a new report, which provides GILC clients with a broad view of the global economy. Insurance, as with all industries, is seeing changes to the market due to global economic pressures, and this report has been produced to give insight as well as to be used as a tool to shape insurers planning for the months ahead. 

Jim Sherwood, Chairman of Global Insurance Law Connect commented, “Macroeconomics now, more than ever, impacts every aspect of the insurance value chain. Recent discussions with our members have highlighted how across the globe, demand for insurance varies by line of business. However, as economies transition to the ‘new normal’, we are likely to see growth in those classes of insurance that have fallen in the last two years.

“M&A activity within the insurance market has increased in many regions, as insurers seek to provide a full-scale offering or upgrade their technology to offer their consumers a more streamlined service. In addition, there is also a greater demand for increased transparency and competitiveness, coupled with tougher regulatory regimes.  All of this is critical to our clients’ working lives.”

Click here to visit the Global Insurance Law Connect website.  Download the full report here.

Risk Radar Report | June 2021

Global Insurance Law Connect (GILC) has launched its third annual Risk Radar report. The report pulls together the key themes from across the GILC network and gives a snapshot of the major issues that are currently bubbling up in each major insurance destination where the GILC has a presence—22 countries.

GILC member firm Sparke Helmore provided the commentary for Australia and noted that a number of issues stand out as having a significant impact on the local insurance industry and the way it operates.  The top three issues that stand-out in the Australia as creating significant headwinds for the local industry are:

  • Business interruption losses
  • Marine delay coverage and supply chain challenges, and
  • Cyber and privacy.

The 2021 Radar Report has seen a marked globalisation in tone.  For the first time, many of the issues member law firms have reported as being currently critical in their markets have converged, with a truly universal focus on cyber, climate change and the impacts of the pandemic bringing new challenges to many markets. A subsidiary point, but one of much importance to all in our industry, is the follow-on impact of the ‘powering up’ of digital marketing, sales and claims processing, as insurance buyers around the globe move online permanently after a year of cultural change.

The global issues of cyber and the impact of the pandemic particularly, resonate in Australia.  Insurers and their customers have had to be quick to respond to enable business continuity and establish a stable position in the market.

The Risk Radar covers Australia, Belgium, Brazil, China, England & Wales, Finland, France, Germany, India, Ireland, Italy, Luxembourg, Mexico, Netherlands, Northern Ireland, Norway, Scotland, Spain, Switzerland, Turkey, Taiwan and United States.

Click here to visit the Global Insurance Law Connect website. Click here to download the full report.

Sparke Helmore appointed to Zurich’s new APAC panel for large and complex losses | April  2021

Zurich Insurance has introduced a new legal panel to provide legal services for large and complex claims in the Asia-Pacific (APAC) region following last year's legal panel arrangement for Europe, Middle East, and Africa (EMEA). Sparke Helmore is delighted to confirm that through its association with Global Insurance Law Connect (GILC), it was successful in appointment to this new legal panel. This appointment complements our longstanding relationship with Zurich Australia, having been part of their legal panel nationally for several years.

Speaking to Insurance Business Australia, Zurich head of claims for APAC Matt Cottrell said: “This is great news for our customers and our broking partners who will be able to receive specialist legal advice provided by highly respected international law firms that are based in the region and have a global reach. The legal and market insights they'll provide to Zurich and our customers will be invaluable, particularly for larger, more complex claims.”

Partner Gillian Davidson (APAC Board representative for GILC and Zurich Relationship Partner), commented to say: “This recent appointment is testament to the strength of our relationship with Zurich and the quality of legal work provided by expert legal team at Sparke Helmore and across the GILC network. We are very excited by the opportunity and look forward to collaborating further with an extremely important partner in Zurich.”

Sparke Helmore is a proud member of GILC and the sole Australian representative firm. GILC is a formal network of leading insurance law experts with its formation inspired by client demand. The network is comprised of like-minded and high-performing independent firms from across the globe that specialise in insurance law.

Approaches to coronavirus | March 2021

Global Insurance Law Connect has launched its 2021 report into the impact of COVID-19 on global insurance markets.  Member firms in 17 countries around the world have contributed and, drawing upon their in-depth understanding of the local jurisdiction and cultural, political and geographical challenges, the report provides a unique overview for the insurance industry.  Member firm Sparke Helmore provided the commentary for Australia.

Gillian Davidson, Partner Commercial Insurance at Sparke Helmore and GILC Board Representative for Asia Pacific commented, “Since our first report on the impact of COVID-19 in July 2020, we have seen changes in the way we live and work and have only just begun to understand the challenges for businesses and economies around the world.  This latest analysis highlights the common themes that are emerging—from coverage to regulatory change—as well as focusing on country specific issues.

“For example, disputes concerning business interruption have triggered challenges in numerous jurisdictions, including in Australia.  We are also seeing courts continuing to adapt and implement the technological leaps and bounds made during COVID, as permanent.  Another recurring theme across many member firm jurisdictions is the change in work practices and business environment as well as the acceleration in digitisation, which has seen the insurance industry move several years’ forward in just a few months.”

Click here to visit the Global Insurance Law Connect website.  Click here to download the full report.

Global Run-off and Legacy Trends report |February 2021

Global Insurance Law Connect (GILC) member firm Sparke Helmore has launched its first run-off report, looking at the drivers of legacy business in both mature and emerging insurance markets.  Specialist insurance law firms in 20 countries around the world have classified their local run-off market, in terms of both its maturity and direction of travel and looked at some of the dynamics behind these developments.

The best way to sum up the findings is “growth held back by legislation”.  One universal truth is that in every market, insurers are looking for opportunities to divest themselves of unwanted legacy portfolios.  While some of the exact drivers may differ, we see a common pattern: in markets where regulation permits portfolio transfers, creative solutions flourish with multiple parties cooperating in flexible ways and, very often, delivering a more positive outcome for those parties.

Closer to home, the Australian run-off market is starting to gain more traction and in 2021, it looks likely to continue to grow and gather momentum. Large global players are looking to run-off specialists to acquire legacy portfolios, which enables them to have a clean and decisive exit from lines of business that are taking up capital and capacity.

Click here to visit the Global Insurance Law Connect website. Click here to download the full report.

Run-off is a global trend, but local expertise is the key to success | October 2020

In 2019 PwC’s Global Insurance Market Run-Off Survey estimated global non-life run-off reserves at circa $790bn, with legacy management expected to become part of the “new normal”. The drivers are different in different regions, but the underlying trend is the same – a new focus on run-off, supplement with a growing awareness that the legislative environment is changing, meaning that deals are demanding and require technical expertise to price and complete successfully.  Read the article, with contributions from Chris Wood and Gillian Davidson.  The article first appeared in Insurance Day UK in October 2020.

Approaches to coronavirus report | July 2020

Global Insurance Law Connect this week launches its new report, “Approaches to coronavirus”. The report brings together the latest views on COVID-19 from Global Insurance Law Connect member firms in sixteen countries around the globe.

The report examines some of the common themes of coverage as well as legal and regulatory issues observed by the member firms. It also looks at the potential claims emerging and how the depth and breadth of those claims could impact a local insurance industry.

GILC member firm Sparke Helmore provided the commentary for Australia and noted that we are seeing COVID-19 have impacts in the travel, life, health, event cancellation and business interruption classes, where limits of coverage are being pushed in respect of losses associated with the pandemic. But we are also seeing impacts across liability, defence costs, financial lines and D&O classes. We think the majority of claims will be long tail claims, both in this pandemic phase but also when the recovery begins.

The Report covers Australia, Belgium, Brazil, China, England & Wales, Finland, France, Germany, India, Italy, Luxembourg, Mexico, Norway, Spain and Switzerland.

Click here to visit the Global Insurance Law Connect website. Click here to download the full report.

Risk Radar | April 2020

Global Insurance Law Connect (GILC) today launched its second annual Risk Radar report. The report pulls together the key themes from across the GILC network and gives a snapshot of the major issues that are currently bubbling up in each major insurance destination where the GILC has a presence—19 countries.

GILC member firm Sparke Helmore provided the commentary for Australia and noted that a number of issues stand out as having a significant impact on the local insurance industry and the way it operates.  The top three issues that stand-out in the Australia as creating significant headwinds for the local industry are:

  • climate risk
  • technology, and
  • war for talent.

Shortly after our members drafted this year’s report, the world was shocked by the advent of the COVID-19 pandemic and we are already seeing COVID-19 have a significant impact across multiple lines of cover.  GILC will be publishing a separate guide dealing with specific coronavirus legal issues and I will share that with you in the near future.

The Risk Radar covers Australia, Belgium, Brazil, China, England & Wales, Finland, France, Germany, India, Ireland, Italy, Luxembourg, Mexico, Norway, Scotland, Spain, Switzerland, Taiwan and United States.

Click here to visit the Global Insurance Law Connect website. Click here to download the full report.

Annual Review 2019 | January 2020

Global Insurance Law Connect (GILC) this week launched its Annual Review for 2019. The compilation provides a consolidated look back at the most noteworthy articles on global insurance from major markets including Australia, Brazil, France, India, Italy, Norway, Switzerland, Taiwan, and United Kingdom—providing insight to the key issues faced by the ever-evolving industry throughout 2019.

Click here to download the full report.

Click here to visit the Global Insurance Law Connect website.

Spotlight on Emerging Markets | October 2019

As growth within the mature insurance markets stagnates, so carriers and brokers are looking for opportunities for growth in the emerging economies. When you consider that these countries include global economic giants China and India, you can see how important the “emerging” players are for insurers.

These markets are growing rapidly, which makes them exciting places to work and invest, but sometimes also higher risk. Each emerging market has its own complexities, its own legal structures, and often a distinct approach by its own government, which must be understood when considering growth prospects and possibilities for entering the market.

One of the strengths of Global insurance Law Connect is the wide membership among specialist firms in emerging (as well as established) insurance markets. As these firms have unique and well-recognised expertise in insurance law in their own markets, it was concluded that clients would find a spotlight on the local nuances of emerging market helpful—a “what’s happening now” guide for insurers who have an interest in this area.

In addition, the comparison of different markets allows readers to understand common and particular themes, and to see how different countries have tackled different growth, regulatory and economic issues. 

Click here to download the full report, which is accompanied by a seminar video series presented by GILC on each of the Emerging Markets, available here.

Click here to visit the Global Insurance Law Connect website.

Risk Radar | July 2019

Global Insurance Law Connect (GILC) this week launched its first annual Risk Radar report. The report pulls together the key themes from across the GILC network and gives a snapshot of the major issues that are currently bubbling up in each major insurance destination where the GILC has a presence—15 countries listed below. Click here to download the full report.

About GILC

Sparke Helmore Lawyers is proud to be a member of GILC and the sole Australian representative firm.

GILC is a formal network of leading insurance law experts with its formation inspired by client demand. The network is comprised of like-minded and high-performing independent firms from across the globe that specialise in insurance law. 

Chris Wood, Partner in Sparke Helmore's Commercial Insurance team, commented “We are delighted to be joining GILC. It makes a powerful statement about the firm’s deep commitment to the insurance sector as well as reinforcing our position as one of the market leading insurance law practices in Australia. This move gives Sparke Helmore the ability to connect clients across the globe, delivering smart solutions through the lens of leading thinking and a dedication to innovation.”

Countries represented in the network are:

  • Belgium
  • Brazil
  • China
  • France
  • India
  • Ireland
  • Italy
  • Mexico
  • Norway
  • Spain
  • Switzerland
  • Taiwan
  • United Kingdom
  • USA

What makes GILC a stand-out is its special legal and risk interest groups. We see this collective contribution of local expertise from each of the member firms as a powerful proposition. There are currently 14 special interest groups including:

  • Construction
  • Complex bodily injury claims and health, safety & regulatory
  • Cyber/TMT
  • D&O
  • Energy
  • Environment
  • Financial lines
  • Marine
  • Fraud
  • Policy development
  • Product liability & recall
  • Property
  • Reinsurance

GILC has also recently committed to four priority specialist groups being Cyber, D&O, financial lines and product liability and recall. These areas align strongly with Sparke Helmore’s national Commercial Insurance team’s priorities and we will actively engage with GILC global thinking for these groups.

Gillian Davidson will take a seat on the board of GILC as Asia Pacific representative. “It’s an honour to be the appointed to the board of GILC and fast-track the firm’s connectivity to the other member firms. We have a great deal of knowledge and expertise to contribute given the burning platforms being experienced across the insurance market. I will be championing a number of issues as a member of the Board including strategic and gender diversity,” said Gillian.

Click here to visit the Global Insurance Law Connect website.

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Gillian Davidson
Gillian Davidson
Partner
t: +61 2 9373 3535+61 2 9373 3535
m: +61 404 828 264+61 404 828 264
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