Global claims professionals are facing one of their most challenging periods ever, according to John Attey, global claims leader for GE Insurance Solutions.
Speaking at the company's inaugural European Claims Conference held recently in Croydon, Attey said the climate of growing litigiousness was making it very difficult for claims professionals "to try to tell the other folks in your business what the probable exposure...[is] because it's hard to anticipate all the liability trends that might happen."
He pointed to the aftermath of Hurricane Katrina, when lawsuits were quickly filed against oil and construction companies. "I feel pretty confident that the list isn't finished yet."
He also raised what he saw as another worrying trend: "Some politicians and legal professionals are looking to reform policy language and rewrite it – after the fact – because they believe that long-accepted policy wordings don't provide a fair result for the
policyholder."
Attey said this practice made it very difficult for insurers and reinsurers to charge the proper premiums for their own balance sheet protection and long-term financial viability.
"And once you get into the courtroom, things don't get any easier, when you find judges who are interpreting the law to maximise insurance coverage, which is also a goal of claimants and defendants", he added.
Attey claimed this has created a situation where plaintiffs and defendants find themselves on one side of the argument, while insurers are on the other side.
This is leading defendants to file bad-faith lawsuits against their insurers, he said, citing the example of a $9m bad-faith judgment against a US auto insurer, which related to its claims handling on a policy that had a premium of only $50,000.
"What you find is that at a time when it's probably more important than ever for claims professionals to be watchful of attempts to expand coverage, it's also more risky and more problematic than it's ever been to do just that," Attey said.