There has been continued stability in the management liability market with increased competition and capacity, giving policyholders more options and a favourable pricing environment with reductions of 5 to 20 per cent. Policyholders operating in sectors exposed to higher rates of insolvencies and employment related claims (such as construction, retail and hospitality) are less likely to benefit from the favourable pricing.
With that said, the expansion of the technology sector (including the risks and rewards of Artificial Intelligence), the challenging ESG landscape and macroeconomic factors are causes for future concern and growing uncertainty for underwriters.
Private credit and insolvencies
Similar to the U.S. there has been huge growth in the private credit market in Australia, with a significant rise in the number of new start-up private credit investment managers over the last few years.
Private credit is an attractive portfolio opportunity as it is more resilient to macroeconomic changes. However, whilst there is currently no economic uncertainty, underwriters are aware that private equity funds directly participating in the private credit sphere may face the risk of increased claims resulting from bankruptcies. This, coupled with the stagnation of interest rates and tariff uncertainties, makes it difficult for businesses to engage in long-term planning.
Underwriters are cautious and aware that typically, a bankruptcy filing is often followed by claims against the bankrupt company’s directors and officers. Securities filings follow shortly thereafter with claims against individuals by the bankrupt company’s shareholders.
Underwriting practices and strategies to mitigate claims exposure have resulted in the application of more restrictive policy terms including the application of insolvency and financial mismanagement exclusions on D&O policies and adjusted pricing. Many insurers are reluctant to remove insolvency exclusions in the absence of evidence to demonstrate healthy balance sheets and regular cash flow. It is likely that this tightening of underwriting criteria will remain for the near future.
Employment Practices Liability
In recent years, the EPL insurance landscape has changed significantly and there has been a notable uptick in employment dispute claims reflecting an evolving workplace landscape where legal, cultural and societal changes converge.
According to the Fair Work Commission’s (FWC) annual report 2023-2024, the commission received 40,190 lodgements representing a 27 per cent increase on the previous reporting period and the highest number of claims since the current national workplace relations system commenced in 2010.
Of the 40,190 lodgements made, 14,772 (37 per cent) were unfair dismissal claims. There were also 987 lodgements about workplace bullying and sexual harassment. The uplift in these applications can be attributed to the growing emphasis on mental health and workplace wellbeing, the increased number of legislative and regulatory reforms (note, however these uplifted figures were before the right to disconnect laws came in to force) and a heightened awareness of workplace issues.
Under the right to disconnect laws, employees of non-small business employers now have the right to refuse to monitor, read or respond to contact, or attempted contact, from their employer or a third party outside of working hours unless the refusal is considered to be unreasonable. The right to disconnect provisions will not apply to small business employers and their employees until 26 August 2025.
In addition, the Respect@Work amendments, which introduced a prohibition on sex-based harassment in all areas of public life, expanded who is protected by the Sex Discrimination Act 1984 (Cth) (SDA), and clarified that civil action for unlawful discrimination can be brought on the basis of victimisation.
Statutory liability
Statutory liability premiums have continued to increase due to the impact of occupational hazards, worksite incidents, and enquiries from regulators, especially within the building, construction, transport, agriculture, government, health care, social assistance and manufacturing industries, where claims are often subject to an occupational health and safety (OHS) investigation and potential prosecution actions. Legal costs to defend actions which cannot be settled can reach $350,000 to $450,000. Insurers are prohibited from insuring fines and penalties in most jurisdictions.
Crime
Employee theft and fraud continues to be a growing issue in Australia. The most common form of employee fraud is asset misappropriation, such as misuse of company assets or theft of cash. Corruption is also common where employees may have vendor management responsibilities.
Where businesses experience employee fraud or corruption, insurers heavily scrutinise internal controls and whether awareness training was provided to staff to facilitate the ‘whistle blowing’ or reporting of any instances which come to their attention.
Raising fraud awareness, implementing strong fraud prevention strategies, improving overall detection capabilities and clarifying individual employee accountability within businesses are viewed favourably by insurers. These factors improve businesses risk profiles, ensuring that adequate controls are in place before a loss is experienced and generally correlate to procuring a strong level of crime cover.
For further advice on optimising your management liability coverage amid evolving regulatory requirements, speak to a Bellrock Advisor.
Continue reading our full range of market updates:
- Insurance Market Overview: July 2025
- Property
- Commercial General Liability
- Motor
- Contractors Plant & Equipment
- Renewable Energy
- Strata
- Claims
- Workplace Risk
- Executive & Professional Risk
- Construction
