Professional Indemnity specialists are preparing for a sharp increase in cover sought by companies and directors.
More than 150 senior Professional Indemnity and Directors’ and Officers’ Liability specialists were polled at the recent Australian Professional Indemnity Group recent annual conference, with more than a third predicting the highest ever level of claims activity over the next 24 months.
Moray & Agnew partner Geoff Connellan says Australia’s growing class action mentality, on top of the aftermath of the GFC, the still weak economy, and the emergence of litigation funders, has created fertile ground for claims against participants in the financial services sector.
Almost one in two of the respondents expect companies and directors will seek greater protection to guard against class actions, with some forecasting greater restrictions to be imposed on terms, he says.
“While litigation funders play an important role – particularly by assembling smaller claims which would not be economically viable to pursue individually – they are also prompting companies and directors alike to seek greater protection.”
“Financial advisors and dealer groups are at risk, with 34.85% of our respondents predicting that profession will experience the highest level of claims activity in the next 24 months.”
Meanwhile, the same survey found almost 40% of respondents expect FOFA regulations to push up the cost of Professional Indemnity premiums, although less than a quarter believe it will lead to better practices.
For more on Professional Indemnity, read our feature here. Meanwhile, Mark Radford of Radford Lawyers explains FOFA’s impact on brokers below.