What liability dynamics means for our clients

One of the major challenges posed by the evolving risk landscape are negative developments in the dynamics of liability regimes. These developments are predominantly observed in the US but also increasingly starting to affect Europe and the rest of the world.

Against this backdrop, corrective actions for both risk assessment and claims management are required. Especially in the US, the conditions in the claims environment have changed dramatically. In particular, unintended consequences have resulted from certain aspects of the U.S. tort system. These include contingent fees, jury trials, opt-out clauses, lack of loser-pay rules and punitive damages. As a result, the total cost of the US tort system has risen to an annual amount of over USD 250 billion, according to US government estimates.
In the light of the dynamic development of liability regimes around the globe, the insurance industry needs to closely monitor legislative developments in order to assess their impact on the industry.

Impact on the industry

The industry needs to closely monitor the key drivers of liability. For example, as collective redress frameworks increasingly become part of the global legal landscape, the insurance industry needs to assess which economic sectors will likely be exposed to more litigation and explore opportunities to provide products and services to these sectors. It needs to draw conclusions for its product offerings and premium calculation. Also, in light of the various changes to the risk landscape, losses need to be reassessed and, more importantly, claims management needs to be adapted in order to resist opportunistic and unfounded demands.

“Insurers and reinsurers have an important role to play in monitoring approaches to collective redress in use or proposed in Europe and emerging markets. Only by remaining abreast of these developments can the industry ensure that the possible negative repercussions that disproportionate litigation could have for insurance cost and availability are avoided,” said Swiss Re’s Head of Casualty, Martin Oesterreicher.

Swiss Re's role

As a leader in managing capital and risk and to protect our clients' and stakeholders' long-term interest, Swiss Re is committed to analysing the evolving conditions in today's liability regimes. In joining forces with our clients we can lead the insurance industry to ensure that insurance coverage is adequately defined and communicated.