After a period of highly competitive pricing, the UK and global insurance market has seen a drastic reduction in profitability over the past five years, brought on by increasingly adverse market conditions. In a hard market such as this, insurers are facing ‘seller’s regret’ over both the risks they have previously written and the terms or price they wrote them on. We know insurance prices are rapidly rising, the UK market having seen more than four years of uninterrupted price increases, with companies on average paying premiums that are over double what they were before the onset of the current hard market (and four times more for the most difficult classes of insurance such as professional indemnity, directors’ and officers’ liability and cyber), with widespread reductions in limits and sublimits, new or broader exclusions and narrower formulations of cover. Yet while claims account for more than 70% of a typical insurer’s costs, and will always be one of the first places they turn in an attempt to secure profitability, monitoring this change in behaviour from insurers has until now not been so easily proven. After tracking all disputes in the last decade involving the top 20 insurers in the UK in the High Court, Appeal Court and the Supreme Court, our latest research, the Mactavish Insurance Claim Litigation Index, reveals exactly this: the UK insurance market has become increasingly litigious since the onset of the hard market. Research shows that companies are now three times as likely to have to sue their insurers in pursuit of a claim than they were just five years ago. Viewed together through the index, the variety and volume of the disputes lodged provides 40 LAWYERMONTHLY JANUARY 2023 Special Feature The UK insurance space has experienced several turbulent years, first facing a global health crisis and then a widespread economic downturn. As profits fall, litigation has soared, placing many insurers at financial risk. We hear from Mactavish CEO Bruce Hepburn as he shares insightful research into the litigation surge, along with his expectations for what it might mean for the future of the sector. Why Legal ClaimsAgainst Insurance Companies AreSurging
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