Globalisation of Collective Redress
Swiss Re’s new Focus Report: “The Globalisation of Collective Redress: Consequences for the Insurance Industry” provides an update on the global spread of collective actions and assesses both the risks and the opportunities that this development carries for insurers.
Collective action is widely seen as an instrument to make access to legal redress easier and more affordable for all. The European Union in particular is interested in using it both to enable compensation for infringement of competition rules and to improve consumer rights within and across member states. About half of the EU member states have already introduced instruments for collective redress. This report is published at an opportune time, as the European Commission is moving towards the introduction of collective redress mechanisms right across the 27 member states.
We are convinced that the insurance industry has an interest in actively participating in the ongoing legislative dialogue in order to explain the potentially adverse consequences of unbalanced collective redress systems. In particular, lawmakers should bear in mind the unintended consequences of the US class action system. They have contributed to a massive increase in the cost of the US tort system to USD 250 billion annually.
On the other hand, the broad trend towards the spread of collective action also clearly presents opportunities for insurers, such as an increased demand for liability coverage.
Clearly, whatever systems are adopted in Europe, Asia and elsewhere, costs need to be kept under control and safeguards against claims without merit need to be built into the system. Access for all should make litigation more efficient, not more expensive - for either plaintiff or defendant.
