A panel discussion at the RIMS conference has delved into the ongoing issue of class action lawsuits plaguing Australian risk managers and their D&O insurance partners.
Class actions are on the rise in the Austalia, though there is still a long way to go before we hit US or Israel numbers, according to a panel of experts.
A debate at the RIMS conferences discussed the reasons behind the 80 class actions currently running in Australia and about half are securities and class actions.
One trend in securities class actions is not many got to trial but also multiple law firms will commence actions against the same companies; ’a scary fact for risk managers in the room’, said Slater Gordon, head of class actions, Ben Hardwick.
“Historically, funders have only targeted share price drops of 20% or above but the CBA claim was only around 10% and it went straight back up but there was still a claim made. This will further increase pressure, especially on carriers. I expect to see more targeted underwriting coming and increased risk selection,” said AIG APAC senior technical claims director, Brett Jordan.
Hardwick said whether or not to take a case, it comes down to case theory. “If you can explain this to your Mum and Dad and there is a clear issue, then it one we would try as it is not too complicated.” He also said the damages have to be significant enough to justify running the case.
Funders are statistically not likely to take a case, says Therium region head APAC, Simon Dluzniak, who added that worth of the case is also one of the leading factors in whether or not to take a case. Recoverability of damages is also important because those who can’t actually pay won’t be worth pursuing. “Many good cases don’t get funded because there is a real concern that they won’t get paid.”
Matt Andrews, managing partner, Kennedys Australia, urged risk managers in the room to ensure their firm keeps good records. “Do the right thing and keep good records of it.”