Research published recently by Lloyd’s and the RAND Institute for Civil Justice Europe (Litigation and business: transatlantic trends, pdf 1.6mb, November 2008) has already raised the prospect that class actions are on their way to Europe from the United States, increasing anxieties of a further litigation boom. Europe is seeing a rise in consumer and investor activism, and a growing willingness by legislators to allow people to pursue mass grievances through the courts.

Swiss Re points out in its new report that the European Union is interested in using collective redress both to enable compensation for infringement of competition rules and to improve consumer rights within and across member states. About half of EU member states have already introduced instruments for collective redress and the European Commission is moving towards the introduction of collective redress mechanisms right across the 27 member states.

Swiss Re says insurers need to get involved: “We are convinced that the insurance industry has an interest in actively participating in the ongoing legislative dialogue in order to explain the potentially adverse consequences of unbalanced collective redress systems.”

Swiss Re suggests lawmakers should bear in mind the unintended consequences of the US class action system, which has contributed to a massive increase in the cost of the US tort system to $250 billion annually.

On the other hand, as Swiss Re points out, the broad trend towards the spread of collective action also presents some business opportunities for insurers, such as an increased demand for different liability coverages, including product liability and Directors & Officers.

But whatever systems are adopted in Europe and elsewhere, the imperative must be to look at what is wrong with the US system, where costs are out of control and claims too often made without merit, and prevent it happening here.

As Swiss Re says, “Access for all should make litigation more efficient, not more expensive—for either plaintiff or defendant.”

>Read lloyds.com article: Are class actions coming to Europe, 18 February 2009

KPMG’s survey (‘A Glimmer of Hope: Growth prospects in the global insurance industry and the escalation of risk and capital management’) of 315 industry executives from 49 countries in March and April 2009 shows that more than half the respondents expect an improvement in organic growth (55%) and expect an improvement in growth by acquisition or take-over (53%) during the next 12 months.

Respondents are also positive about their business prospects as they relate to premium volume (53%), expense ratio (53%) and capital reserves (47%). They are least positive about their share price, with only 40% of respondents expecting to see an improvement in this area.

Concern over the impact of the weakened economy, and particularly the capital markets, has increased insurance companies’ focus on risk management, the survey found.

Both regulators and government showed double-digit growth in terms of influence on company risk management policy and execution; ratings agencies decreased the most, with their influence falling by half to 14%.