Trending Now
Commercial Covid-19

Investor Caution in the Wake of a Hard Insurance Market

The insurance industry is facing a hard market thanks to multiple factors including the COVID pandemic. Hard markets are a time of high insurance premiums, more precise and complex underwriting, fewer policies being written, and a shrinking pool of competitors. With that in mind, insurers are raising money to make the most of opportunities as they arise. At the same time, investors are understandably cautious.

Intelligent Insurer details a recent panel discussion on hard markets with commentary from Stefan Holzberger of AM Best and Jon Warwick of ILS Capital. The experts predict how investors may respond to hard market conditions and how that will impact the insurance industry in the coming months.

Holzberger notes that factors affecting the market cycle include low-interest rates, loss creep from previous catastrophic events, and litigation finance. He predicts a sustained hard market. Lit fin can be a particular thorn in the side of insurers, since it affords ordinary people the opportunity to pursue insurance claims even after they’ve been denied.

Warwick explains that while investor confidence is favorable, capacity is reduced. This reduced capacity can create more difficult conditions for reinsurance programs. That’s bound to cause a spike in prices. In some areas, rates have increased as much as 75%.

While some factors were in place even before the start of the year, the uncertainty brought about by COVID has brought extreme volatility to the market. Holzberger predicts that this rate of hardening will continue to increase and intensify. Warwick predicts that rate hikes will impact territories and classes differently. He refers to one company that doubled its insurance—causing premiums to go up a shocking 1,000%.

Both experts predict good things for the future of the insurance industry. Despite some difficulties, the market is well-capitalized with solid liquidity.  

Commercial

View All
Case Developments Commercial

Omni Bridgeway Funds Fresh Paint-Peel Claim Against Toyota Australia

By John Freund |

Omni Bridgeway has stepped in to bankroll a newly-filed Federal Court class action alleging that certain 2010-14 Toyota Corolla models suffer from a manufacturing defect that causes factory “040 white” paint to flake under UV exposure. Lead plaintiff Mary Elizabeth Fabian seeks compensation for diminished vehicle value and associated distress.

An article in Lawyerly says William Roberts Lawyers lodged the claim late Wednesday in Sydney, with Omni providing “no-win-no-pay” financing and an adverse-costs indemnity. The suit covers consumers who bought affected sedans or hatchbacks after 1 January 2011.

Plaintiffs allege Toyota breached Australia’s Consumer Law guarantee of acceptable quality, citing a 2022 Toyota bulletin that acknowledged adhesive degradation between primer and base metal. Class members face no out-of-pocket exposure; Omni recoups costs and takes a court-approved commission only from any recovery. Registration is open nationwide, and Omni’s portal details eligibility tests based on VIN build plates and paint codes.

The case exemplifies funders’ deepening appetite for high-volume consumer-product claims. Success here could spur similar “cosmetic defect” suits—particularly in Australia’s active class-action market—further diversifying funders’ portfolios beyond financial-services and securities disputes.

Case Developments Commercial

Burford Capital Faces Fresh Argentine Pushback in YPF Turnover Battle

By John Freund |

Argentina’s legal team has fired its latest salvo in the long-running, Burford-backed YPF litigation, lodging two emergency briefs with U.S. District Judge Loretta Preska that seek to halt her 30 June order compelling the country to transfer its 51 percent stake in the oil major to a BNY Mellon escrow within 14 days.

An article in Infobae reports that the Treasury Solicitor’s Office argues immediate compliance would violate Argentina’s hydrocarbon-sovereignty statute, trigger cross-default clauses, and irreversibly strip state control of a company central to the Vaca Muerta shale programme. The briefs also insist the $16.1 billion judgment—won by Petersen Energía and Eton Park after Burford Capital financed their claims—presents “novel questions” on sovereign immunity and extraterritorial asset execution, meriting a stay pending Second Circuit review.

Burford’s creditors countered earlier this week, citing Governor Axel Kicillof’s public remarks as proof of obstruction. Argentina retorted that Kicillof holds no federal brief, seeking to neutralise that leverage while underscoring the U.S. Justice Department’s past reservations about enforcing foreign-sovereign turnovers. Judge Preska is expected to rule on the stay motion within days; absent relief, the share transfer clock runs out on 15 July.

A stay would underscore enforcement risk, even after a blockbuster merits win. Funders will watch Preska's decision, and capital-providers hunting sovereign-risk cases may calibrate pricing accordingly.

Commercial Deals

Palisade, Accredited Specialty Secure $35 Million Legal Risk Cover

By John Freund |

Specialty managing general underwriter Palisade Insurance Partners has taken a significant step to scale its fast-growing contingent-legal-risk book, striking a delegated-authority agreement with Accredited Specialty Insurance Company. Including the Accredited capacity, Palisade has up to $35 million in coverage for legal risk insurance products. The New York-headquartered MGU can now offer larger wraps for judgment preservation, adverse-appeal and similar exposures—coverages that corporates, private-equity sponsors and law firms increasingly use to de-risk litigation and unlock financing.

An article in Business Insurance reports that the deal provides Palisade's clients with the comfort of carrier balance-sheet strength while allowing the insurer to expand its program portfolio. The capacity tops up Palisade’s existing relationships and arrives at a time when several traditional markets have retrenched from contingent legal risk after absorbing a spate of outsized verdicts, leaving many complex disputes under-served.

Palisade leadership said demand for robust limits has “never been stronger,” driven by M&A transactions that hinge on successful appeals, fund-level financings that need portfolio hedges, and secondary trading of mature judgments. Writing on LinkedIn, Palisade President John McNally stated: "Accredited's partnership expands Palisade's ability to transfer litigation exposures and help facilitate transactional and financing outcomes for its corporate, law firm, investment manager and M&A clients."

The new facility aligns the MGU’s maximum line with those of higher-profile peers and could see Palisade participate in single-event placements that have historically defaulted to the London market. For Accredited, the move diversifies its program roster and positions the insurer to capture premium in a niche with attractive economics—provided underwriting discipline holds.