Anti-business sentiment costs Beazley in claims but profits triple

Insurer Beazley is facing higher claim payouts due to more punishing damages payouts blamed on anti-business sentiment in the US.

Beazley, like many insurers, offers directors’ & officers’ (D&O) insurance to protect senior managers if they get sued.

A new phenomenon in insurance circles, known as “social inflation”, is driving up the amount Beazley and others have to stump up to cover payouts.

The phrase refers to US juries meting out more severe punishments in damages cases against large corporates.

In the US, for example, hospitals now face much higher payouts for botched operations than a few years ago.

This has been blamed on rising anti-business sentiment from younger jurors who want to punish companies.

At Beazley, the proportion of claims over $5 million apiece have surged as a proportion of its total hospital claims. In response, the price of D&O insurance has risen 30%.

Beazley's combined ratio, which measures profitability, rose to 100% from 98%. Rising ratios are bad for insurers because it means they are making less money.

Despite the D&O claims issue, Beazley profits trebled to $268 million (£207 million) after strong investment returns.

Gross premiums written also increased by 15% to $3 billion.