INDIA Law and Practice Contributed by: Neeraj Tuli, Rajat Taimni, Amrit Singh and Anuj Bahukhandi, Tuli & Co
7.5 Forward Outlook and Market Response Over the next 12–18 months, geopolitical uncertainty is likely to result in more complex coverage disputes, particularly in marine, aviation, energy and property insurance. Disputes are likely to focus on the clas- sification and causation of losses, including whether an event constitutes war, terrorism, civil commotion or sabotage, and the application of corresponding exclusions. Greater emphasis can be expected on the precise wording of war, terrorism and sanctions exclu- sions, as well as causation and aggregation issues, particularly where losses span multiple jurisdictions or insurance layers. 8. Emerging Risks 8.1 Market Overview of Emerging Risks Emerging risks are increasingly giving rise to com- plex coverage disputes, particularly in relation to cyber-risks, technology failures, AI-related losses and climate-related events. Cyber-insurance has seen increasing claims activity, with disputes requir- ing greater reliance on forensic evidence to establish the nature and extent of the loss. The increasing use of AI and technology is also like- ly to generate disputes concerning whether losses fall within existing policy definitions and exclusions, particularly where traditional policy wordings do not clearly contemplate AI-related events or systemic technology failures. Similarly, climate-related and catastrophe losses may give rise to disputes con- cerning causation, aggregation and the application of exclusions. From an advisory and regulatory perspective, we are seeing insurers and insurance intermediaries increas- ingly grapple with AI-enabled risks, both in relation to compliant deployment as well as fraud and cyber- security risks. These risks are being addressed prin- cipally through existing corporate governance, out- sourcing, policyholder protection, cybersecurity and data protection norms, since the IRDAI has not yet introduced a comprehensive AI framework. We are also seeing greater focus on data-localisation requirements and readiness for compliance with the
rate with the policyholder. This helps provide certainty as to the amount payable, and avoids disputes arising from currency movements. 7.3 War, Political Risk and Exclusions War, terrorism and political-risk exclusions have become more significant in light of recent geopolitical developments, particularly the Russia–Ukraine con- flict and the 2026 conflict involving Iran and the result- ing disruption to maritime trade. These developments have increased the potential for disputes concerning the classification of losses, causation and the applica- tion of war, terrorism and political-violence exclusions, particularly in marine and aviation insurance. Indian jurisprudence has principally developed around terrorism exclusions. In Narsingh Ispat Ltd v Oriental Insurance Co Ltd , 2022 INSC 502, the Supreme Court held that, where the policy itself defines an act of terror- ism, contractual definition governs. The insurer bears the burden of establishing that the loss falls within the exclusion; where the exclusion is ambiguous, the benefit goes to the insured. The Court accordingly rejected reliance on broader statutory definitions of terrorism where these were not incorporated into the policy. There is not yet a substantial body of reported Indian litigation specifically concerning war or politi- cal-risk exclusions arising from the recent geopolitical conflicts. However, these events are creating greater uncertainty around the distinction between war, ter- rorism, civil commotion and other forms of political violence, particularly where losses arise from attacks by non-state actors or involve maritime and aviation risks. 7.4 Supply Chain and Systemic Loss Events While the authors have not encountered claims arising solely from supply chain disruptions or systemic loss events, these factors have introduced greater uncer- tainty into the reinstatement process under property insurance. In particular, shortages of materials, labour constraints and broader market disruptions can delay repairs and increase costs. As a result, insurers are increasingly reliant on loss adjusters and other project professionals to monitor progress, manage delays and help expedite reinstatement following a loss.
160 I NSURANCE L I T IGATI O N 2026
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