Loss log: Liability trends

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  report from Allianz Global Corporate & Specialty (AGCS) which highlights five trends for the sector.

The report also analyzes some of the major causes of insurance industry liability claims over the past five years – defective product incidents account for half of the value of all claims (see graphic) while faulty workmanship/maintenance incidents rank as the second major cause of losses – and looks at how the coronavirus outbreak is already impacting the liability insurance sector.

With more people staying at home through the pandemic, and with the temporary closure of many shops, airports and businesses, notifications of slip and fall incidents, which are one of the most frequent causes of liability claims, have slowed.

However, the liability insurance market could yet see claims brought by third-parties for injury or property damage due to failure to adequately protect against the coronavirus, as well as employee action against employers who did not appropriately protect them. Product liability and recall claims tend to follow economic activity, so there could be an impact in these areas with the economic downturn. Coronavirus also could affect claims through changes to hygiene and working practices. Meanwhile, restarting production after periods of hibernation may give rise to human error incidents.