Financial services is likely to remain a hotspot for professional indemnity claims amid regulatory scrutiny, Moray & Agnew Lawyers says. 

Developments include Australian Securities and Investments Commission actions against investment funds Shield Master Trust and First Guardian, which have led to prosecutions along the chain of involvement.

“Many of these proceedings will be the first time ASIC has taken such action, and most will set precedents for the scope of liability for providers of financial services, with obvious implications for their insurers,” partners Michael Polorotoff, Scott Cowell, Jeremy Peck and Emily Daffy say in an Australian insurance market overview.

Regulatory action has also targeted private credit markets, with real estate funds singled out. Conflicts of interest, fee disclosure, valuations and inconsistent terminology are identified as operational concerns. 

“All of this creates an epicentre of claim activity around any professionals with a connection to the financial services industry,” the article says.

This activity has coincided with a substantial increase in professional indemnity capacity over the past couple of years.

The construction industry is another area of concern, with insolvency prevalent due to inflation impacts on fixed-price building contracts.

Building defects claims continue to be expensive to defend and tend to implicate most construction professionals involved with projects.

In the directors and officers area, ASIC enforcement priorities bring more regulatory investigations, with cybersecurity and resilience a focus.

“It is only a question of when (and not if) ASIC brings a prosecution against individuals for failing to ensure their organisation has adequate cybersecurity measures in place, in breach of their directors’ duties,” the lawyers say.

In liability, historical abuse continues to dominate the landscape and drive claim costs. 

The article is part of the Chambers and Partners Insurance and Reinsurance Australian Trends and Developments Guide.