Page 39 - Insurance Times December 2015 SAMPLE

Liability insurance also covers the insured's strict liability or liability premiums written in 2013. This is due to two
vicarious liability arising from negligence or breach of duty reasons - firstly the size of the US economy and secondly
of his employees and others under his care and supervision. the increasing trends of high court awards in the third party
It is very difficult for the insured and the insurer to properly legal liability cases. Here at present liability insurance is
predict the sources of the liability and the gravity of about 0.5% of GDP.
negligence impacting the amount of liability awards and
claims. Thus liability insurance underwriting has become a In 2013, US businesses houses paid premium about $84
specialized one based on sound knowledge and skill of the billion for various liability insurances - about $50bn on
underwriters' about legal, technical, social and financial commercial general liability, $12 billion for Errors and
aspects, which will be discussed in general as well as in Omissions (E&O), $5.4 billion for Directors and Officers
particular for the product concerned hereinafter. (D&O), $13 billion on the liability portion of commercial
multi-peril policies, $9.5 billion for medical malpractice and
International Perspective of Liability $3 billion for product liability covers.
Insurance:
Globally the UK is the second largest market for liability
Liability insurance is a very important segment for the insurance, with $9.9bn liability premiums in 2013, where
general insurance Sector. Liability insurance has been public liability and product liability insurance contribute
considered more important than property insurance in the substantially. In continental Europe, the largest liability
commercial world - especially in the western part where insurance markets are Germany, France, Italy and Spain.
the public awareness about their legal rights and duties is Together they made up almost $22 billion of global liability
much more compared to the East. Growth in liability premiums in 2013.
insurance has been driven by increasing risk awareness and
regulatory changes. Japan and Australia are the major markets in the Asia
Pacific region, with commercial liability premiums of $6bn
However current liability insurance is growing fast with and $4.8bn respectively in 2013. Australia has mandatory
increasing legal awareness of the people and speedy covers for aviation, maritime oil pollution and residential
settlement of court cases unlike the past. With premium construction and, in certain states, for medical
income of $160bn in 2013 liability insurance accounted for practitioners, property brokers and stock brokers. In many
10% of global non-life premiums of $1550bn. countries, liability insurance is a compulsory form of
insurance for those at risk of being sued by third parties for
Analysis shows that liability insurance is more prevalent and insurance.
considered more important in the advanced countries
compared to emerging markets. The advanced markets With increasing globalization of trade, commerce and
account for 93% of global liability premiums in 2013. industry and with the increasing use of cross-border capital,
the liability risks are globally extensive and having far
The US is the largest market, with about 51% of the global reaching effect in many covers like CGL Policy, D&O Liability
Policy, Product Liability Policy. So we need to be acquainted
with global standards, study and trends in respect of liability
insurance. This article attempts to fundamental
considerations of underwriting liability insurance.

Underwriting Considerations

Underwriting Considerations basically include;
1) Risk analysis & CASE Study
2) Examination of origin of Legal Liability risks,
3) Types of Liability Policy
4) Application of Principles of Insurance

The Insurance Times, December 2015 35

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