INTRODUCTION Contributed by: Simon Cooper, DWF
Artificial intelligence As well as the regulatory issues associated with the growth of insurtech, the adoption of AI technology by insurance buyers raises new legal challenges for insurers, including the question of where liability will lie if a piece of AI technology dependent on machine learning causes injury or breaks the law. Similar issues will arise in relation to the programming of autono- mous ships and vehicles and the choices they may have to make when faced with the likelihood of colli- sion. The answer to these questions is likely to differ between jurisdictions, so it will be important for insur- ers to understand local laws before accepting busi- ness that exposes them to risks of this nature. Political tensions It is likely that 2026 will see continuing political insta- bility and tensions between some of the world’s lead- ing economies. The insurance industry is not immune to the commercial and regulatory consequences of such conflict. These political tensions have also been expressed in actual or alleged cyber-attacks and other acts of sabotage by one country or its proxy against another. Such attacks can lead to very significant insured losses, both in targeted countries and in other countries that experience “collateral damage”. Although the Brexit transition period terminated on 1 January 2021, a comprehensive replacement for the previous passporting arrangements has not yet been agreed between the UK and the remaining EU members. This is one of the many regulatory and legal uncertainties that will continue to hinder UK and Euro- pean insurers in 2026. Until the post-Brexit regulatory framework has been agreed, bilateral arrangements
between the UK and individual EU member states are of an ad hoc nature, and there will inevitably be uncer- tainty over the ability of UK insurers to write European business (and vice versa) and how that business may be written – for example, with respect to the regulation of underwriting agents. The emergence of new risks At the same time, new risks are emerging, and con- cern continues about the potential for a “new asbes- tos” – be that legalised cannabis and medical mari- juana, opioids, microplastics, nanotechnology or “forever chemicals”. The legal context for the handling of insurance claims and coverage disputes in different jurisdictions will play a large part in determining the impact of any of these risks, if they do emerge. Despite the uncertainty and risk the industry faces over the coming years, there is no shortage of invest- ment, with private equity houses continuing to show an interest. The industry saw continuing consolidation among insurers and brokers in 2025. In addition, mon- ey from outside the industry continues to be invested in new insurance vehicles, such as insurance-linked securities (ILS). Regulators in several jurisdictions are opening their markets to the underwriting of these products, but it remains to be seen whether they can be sufficiently flexible to wrest a meaningful share of the market from Bermuda. Overall, 2026 is expected to see the continuation and speeding up of the modernisation process across the insurance industry, together with a slower, but none- theless significant, shift towards new markets and new ways of doing business.
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