Increasing volume and complexity of regulatory activity in the UK and EU is a major driver


The number of D&O claims in the UK has risen steadily over the last decade, showing a four-fold increase since the financial crisis, a new report by Marsh found.

In its report, ‘Professional and Management Liability insurance claims: Common pitfalls for unwary policyholders’, published today, Marsh looks at its UK clients’ D&O claims between 2005 and 2015, and the main causes of declined claims.

Between 2005 and 2007 the firm recorded an average of 200-300 D&O claim notifications. With the onset of the financial crisis, claim notifications rose by 75% to nearly 500 in 2008, before peaking at 1,685 claim notifications in 2012. Since 2013, Marsh has received, on average, approximately 1,300 D&O claim notifications in the UK annually, a four-fold increase on pre-financial crisis levels.

“The increasing volume and complexity of regulatory activity in the UK and the European Union is a major driver of this upward claims notification trend,” said Robert Lewis, claims leader, UK risk management practice at Marsh. “There is also an increasing level of cross border co-operation among regulators and a shift towards class or collective actions across EU member states.”

While less than 1% of financial lines claims made by Marsh’s UK clients were declined by insurers between 2011 and 2015, 39% of these declined claims resulted from a failure to notify in accordance with policy requirements or timeframes, or at all, followed by the claim being subject to a policy exclusion, at 31%.

“Organisations should review the terms and conditions of their policy wordings as soon as they are received, not simply when a claim is first made, or worse, once it has developed or settled,” Lewis said.