Insurers and litigation funders operating outside the US have not to date faced the same challenges as their US counterparts in relation to class actions. This of course is because mass-tort actions have traditionally been a peculiarity of the US legal landscape, being much less common in other jurisdictions.
However, the development of legal mechanisms for class actions, or collective redress as it is referred to in the EU, is progressing – both at an EU level and at a national level, inside the EEA and in other jurisdictions, such as Australia, Canada and in Asia (Thailand) – all of which have recently implemented or are implementing legal frameworks to enable class actions.
The drive to implement this legal reform is being driven by a desire to enable actions by groups of investors and by the fact that, in some jurisdictions, such actions are made more feasible by the availability of litigation funding.
Whilst questions remain as to whether class actions, in practice, provide enough benefit for the individuals comprising the claimant class as compared with the lawyers running the actions, these developments undoubtedly present both opportunities and challenges for insurers and litigation funders.
D&O insurers and liability insurers in particular can expect to face greater exposures, in the light of potential class actions. This may of course also translate into greater demand for their products.