According to SHA’s 2019 Specialist Risk Review, between 2016 and 2018, the average value of intimated liability claims expanded by over 100%, from R 557,000 to R 1,25 million. The total value of capital settlements on liability claims during this period has also grown by 42%. The results from older data are even more startling, with the annual liability claims payments shooting up by 190%, from R 59 million in 2013 to R 171 million at the end of 2018.
The intimated values for personal injury (slip and trip) claims, for example, have risen from R 172,600 to R 270,690 between 2016 and 2018. This essentially means that individuals who sustain injuries on an insured’s property, now claim over 56% more in damages then they did two years ago. Even more notable, the average intimated claims for product liability surged from R 1,65 million to R 14,75 million. The frequency of claims intimations in both these categories has also increased exponentially.
One category that bucks the trend is the arena of property damage – the average for intimated claims where the third party is claiming for physical damage to property damage has remained relatively flat at around R 1 million for the past two years.
In terms of the total claims that were paid, professional indemnity and liability policies paid out a combined sum of around R 276 million in 2013, which went from R 360 million in 2016 to R 440 million in 2018, which reflects a total increase over the period of 59%.
The intimated value of the average claim under a broadform policy has jumped from R 557,000 in 2016 to R 1,25 million in 2018. As a category on its own, product liability has probably seen the biggest increase in claims severity. The average claim for product liability in 2016 was about R 1,65 million. By 2018 this had shot up to R 14,25 million.
Other interesting findings
Risk management is another important factor that is not receiving an appropriate level of attention in the market. According to the survey, only 44% of businesses conduct their own quality control audits, 43% ensure that their supplier and client risks are managed through adequately worded contract which clearly outline responsibilities, and 36% confirm that their suppliers have sufficient liability cover.
57% of professionals currently have PI cover in place. It is concerning that almost a third of professionals do not keep formal systems in place for tracking incidents. For each architect that had a claim against their PI policy, the average intimated amount was around R 1 million while the average claim size for attorneys was about R 3.7 million. Most shocking of all, the average PI claim against an engineer was R 13 million.
36% of business leaders have dealt with workplace injuries that were covered by COID. However, claiming from COID still seems to be a challenge for employers. The survey showed that 49% of businesses that submitted claims to COID in the last three years, complained about long delays. Around 76% of these businesses had to pay upfront for immediate medical treatment of injured employees and 24% of companies reported they suffered notable financial losses resulting from an incident.
Source: SHA’s 2019 Specialist Risk Review