In Australia, financial services companies are facing higher directors and officers (D&O) insurance costs as the number of securities class actions rise.
The Financial Standard reports that according to Richard Head, a senior executive at D&O insurance provider, Liberty International Underwriters, “the landscape has changed from the occasional shareholder class action only five years ago to practically one lawsuit everyday.” Head added that “what’s really changed is the frequency of claims against directors and officers by shareholders. We, as the insurers, now have a greater exposure.”
Linda Murphy, a partner with legal firm Colin Biggers & Paisley, stated that the result of the financial crisis has been to “energise the regulator and encourage the growth of securities class actions.” As a result, the number of lawsuits is headed up, and insurance premiums for financial institutions and services companies are also headed up to cover the risk, Head said.
