Make no mistake: the victim list from the D&O war will be long and distinguished. But how much more blood will be allowed to flow out of corporate Australia before something is done, our editor Lauren Gow questions.
It’s official. The D&O war in Australia has very publicly claimed its first victim. This week, Allianz Global Corporate & Specialty announced it will cease writing long tail financial lines business in Australia and close its operations in New Zealand with effect from 1st September 2019, following a strategic review of the business. CEO William Van Wyk is also “off pursuing other opportunities”.
Commenting on the strategic changes to the AGCS Pacific business, Sinéad Browne, AGCS board member and chief regions and markets officer openly slammed litigation funding firms for the downfall, saying in a statement: “The rise in legal funders and the ultra-challenging legal environment which drives extraordinary claims levels in our sectors have made it untenable for AGCS to continue offering long tail business in the Pacific. As large corporate risks are very much exposed to the alarming increase of class action suits and litigation funders, it was no longer sustainable for AGCS to continue offering coverage for long tail risks.
And the bad news just keeps coming. Companies in the ASX200 experienced a median 122% increase in primary premiums in the second half of last year following an 89% gain in the first six months, according to an Aon first quarter market insights report.
At least 15 securities class actions, including competing claims, have been filed against listed companies since January last year and a further five or more are being investigated.
StrategicRISK has long been a critic of the rise of legal funders who are effectively leaving the Australian market vulnerable and without coverage for their directors and officers. This, in turn, means we are no longer be able to attract the type of board talent required to hold our place as a blue ribbon market in which to do international business.
AGCS and Van Wyk are the first victims of these greedy claims sharks, but whose head will be next? And even worse than this, how many more will have to fall and how much coverage will need to be pulled from the market before something is done to shut down these frivolous lawsuits? It’s time the Government steps up