Companies across Europe, the Middle East and Africa (EMEA) are buying higher levels of liability insurance as fears increase over possible claims during the economic downturn, according to Marsh.

Heightened demand and competitive pricing, has led to an increase in the amount of insurance purchased compared to four years ago, research by the broker shows. According to their Liability Insurance Buyers Report 2012, the limit of liability insurance purchased across EMEA has increased by seven per cent since 2008, following three previous years of decline. Since the onset of the financial crisis, the average level of insurance limit in EMEA has risen from €29 million in 2008 to €31 million in 2012, peaking at €32 million in 2011. In Northwestern Europe, including the UK, the average limit purchased for liability insurance has increased by 40%, from €40 million in 2008 to €56 million in 2012.

“Continuing economic uncertainty has increased the perceived need for the protection insurance can offer, at a time when capacity remains abundant and pricing favourable for many firms," says Alain Petit-Lambotte, EMEA casualty practice leader at Marsh.

“Since 2008, most companies have been able to afford the extra liability insurance they have thought it prudent to purchase. However, these favourable conditions are being challenged in some regions across EMEA, such as the Middle East and India, where some insurers are applying more stringent underwriting criteria in an effort to counter downward pricing.”

According to Marsh’s data, pricing has decreased by 22% since 2006, while the maximum available capacity for EMEA-domiciled buyers now exceeds €2.5 billion. However some firms, including pharmaceuticals with US exposures, those with long-tail risks associated with occupational disease or US product liability, and smaller firms whose exposures exceed their revenue, are now experiencing difficulties in securing the liability cover they require. Perceived as a ‘significant risk’, some insurers are instead opting to offer less cover to these firms or apply tougher conditions before they do.

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