Claims Market Update: January 2025

Claims Market Update
Joe Hershewe - Bellrock Advisory

Joe Hershewe

The 2024 calendar year continued as a period of growth and activity for Bellrock’s Claims Team. Some key statistics from this period include:

  • Claims reserves of over $66,046,330.40 are currently being managed by Bellrock.
  • An average of 96 new claims notified each month.
  • An average of 38 claims settled each month on behalf of Bellrock clients
  • A total of $19.7M paid in claims over the last calendar year (and as at 16 December 2024), advocated for by the Bellrock Claims Team across all insurance classes.

The breakdown across business lines for settlements and payments obtained by Bellrock’s Claims Team are illustrated in the table below.

Claims paid by policy class 2024 calendar year - Bellrock Advisory

Claims paid by policy class 2024 calendar year | Bellrock Advisory

 

Bellrock continues to see overall increases in claims activity with a total of 1156 new claims notifications handled by the Bellrock Claims Team in 2024. The breakdown across business lines is illustrated in the table below.

New claims notification by policy class 2024 calendar year - Bellrock Advisory

New claims notification by policy class 2024 calendar year | Bellrock Advisory

Current trends in claims

Overall, in 2024 claims continued to trend in accordance with our July 2024 Market Update – Claims. However, some notable developments across the liability and property classes of business include the following:

  • The quality of insurers’ claims handling propositions across all classes of business remains an area of focus for Bellrock. The reality remains that not all claims services are created equally, which is a key factor underpinning the recommendation and selection of an insurance partner for Bellrock’s clients. As noted in our recent article What’s your claims made continuity plan?, strong consideration should be made to switching insurers particularly for “claims made” policies. However, equal consideration should be given in terms of insurer selection with regards to the extent of cover provided and claims service excellence.
  • As noted in the Insurance Council of Australia’s Insurance Catastrophe Resilience Report 2023-241, the cost of extreme weather events continues to rise in Australia with insurers historically paying approximately $2.1B per year on average in settlements following extreme weather events over the last three decades. Over the last five years this annual average has ballooned to $4.5B per year.
  • Bellrock continues to see a large volume of building defect claims in residential and commercial high-rise buildings and beyond.
  • To date, Bellrock has not noticed an appreciable rise in employment claims following the Closing the Loopholes No. 2 Amendments to the Fair Work Act which now entitles many employees to the “right to disconnect”, which we canvassed in our previous update.
  • Class action filings continue to decline due predominantly to the reduction of securities class actions by shareholders, which follows the recent defence judgments secured in cases such as the Zonia and Baron securities class actions against the Commonwealth Bank of Australia.
  • Insolvencies continue to remain high particularly for SMEs.
  • Increases in legal costs, in tandem with the inclusion of psychiatric injury damages in personal injury litigation including “worker to worker” claims, continues to distend public liability losses.

Looking forward – areas of potential claims growth

  • The Cyber Security Act2 (CSA) received Royal Assent and became law on 29 November 2024. The CSA’s key features include: (1) a mandated minimum cyber security standard for smart devices; (2) mandatory ransomware reporting; and (3) the establishment of a Cyber Incident Review Board to perform reviews of material cyber events and share lessons learned.
  • The Privacy and Other Legislation Amendment Bill 2024 (Cth)3 passed the Senate on 28 November 2024 and once it obtains Royal Assent it will be an Act of Parliament. Amongst other features, the Bill provides for a new statutory tort for serious invasions of privacy and grants the Office of the Australian Information Commissioner (OAIC) new powers to issue penalties for serious privacy breaches. This follows the recent Victorian case of Lynn Waller v. Romy Barrett [2024] VCC 962 (still subject to an appeal) wherein an Australian court recognised a distinct cause of action for invasion of privacy in the common law separate from the established tort of breach of confidence.
  • The High Court in Bird v. DP [2024] HCA 41 unanimously held that vicarious liability cannot be imposed absent an employment relationship. This case has important implications for abuse claims and other tort claims as absent an employment relationship, there must be some other legal basis to hold another party liable for the actions of a perpetrator.

For guidance on market opportunities and insurance trends affecting your business, contact your Bellrock Advisor.

 

1 https://insurancecouncil.com.au/wp-content/uploads/2024/08/21100_ICA_Catastrophe-Report_Print-2024_Final-spreads.pdf

2 https://www.homeaffairs.gov.au/about-us/our-portfolios/cyber-security/cyber-security-act

3 https://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r7249

 


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