Listeria outbreak may prompt hard cycle

While many lines of business within the short-term insurance market have hardened in recent years due to economic, political and environmental factors, the general liabilities and professional indemnity market has remained relatively stable.

“The sector has experienced a prolonged ‘soft’ market cycle, which has been characterised by thin pricing across lines of liability cover as big limits are attainable from reinsurers and insurers are competing for business,” explains Simon Leppard, head of Infiniti RisQ.

However, Leppard expects a shift in the status quo once the liability claims that pertain to the listeria outbreak have been finalised. “While the sum insured by Tiger Brands is not public knowledge, figures mentioned point to a significant claim.”

Leppard adds that general liability insurance would also cover the legal fees incurred by the company, as sums insured are inclusive of costs. The policy may also have included product recall cover.

“Once the liability claim has been settled, and depending on the settlement route chosen, the final figure could be prolific. This could potentially force the general liability and professional indemnity sector into a hardening cycle,” he suggests.

But, until the full extent of the liability issues are established in court proceedings, it will be difficult to quantify the repercussions for the sector.

“The listeriosis outbreak could impact on many different areas of general liability and professional indemnity,” explains Catherine Berry, divisional director at Camargue Underwriting Managers. And given this case follows other general liability claims which are still pending, Berry believes the potential for a hardening cycle in this sector is strong.

These cases have also thrust the need for comprehensive general liability cover to the forefront of discussions around good corporate governance, especially among food manufacturers.