UK Law and Practice Contributed by: Daniel Robin and Chloe Franklin, SDV Fenchurch
defences, including limits, exclusions, notification issues and aggregation arguments. 6.2 Emerging Liability and Defence Trends Defence strategy is increasingly shaped by regula- tory scrutiny, reputational risk, group litigation, cyber incidents, building safety claims, ESG allegations and insolvency. In many claims, the legal defence cannot be separated from public communications, regulatory engagement and commercial continuity. Insurers are responding through closer oversight of defence costs, panel appointments, reservation of rights letters, coverage monitoring counsel and more detailed reporting requirements. Policyholders often accept insurer involvement where costs are being funded, but conflicts can arise where insurers reserve rights or seek to influence settlement strategy. Co-ordinated multi-claimant actions also create aggregation and allocation issues. Where claims share common factual allegations, insurers may argue for a unified defence and aggregated treatment. Policy- holders may resist if that approach reduces available limits or creates conflicts among insured parties. 7. Geopolitical Factors 7.1 Geopolitical Drivers of Insurance Disputes Geopolitical instability has materially increased both the volume and complexity of insurance disputes. The most significant drivers are the war in Ukraine, sanc- tions, aircraft leasing losses, political violence, cyber warfare, trade restrictions, supply chain disruption and energy volatility. These developments affect aviation, marine, political risk, trade credit, cyber, energy, property, business interruption and reinsurance. They commonly raise issues of proximate cause, confiscation, deprivation, war exclusions, sanctions clauses, aggregation and whether losses are physical, financial or contingent. The scale of Russian aviation claims has made them a defining example. They have required courts and market participants to consider how war risk, aviation
hull, contingent and reinsurance programmes respond when aircraft are retained and cannot be recovered. 7.2 Sanctions and Payment Challenges Sanctions regimes have affected claims handling at every stage: investigation, reserving, settlement, pay- ment and reinsurance recovery. Insurers must consid- er whether payment is prohibited, whether a licence is required, whether a bank will process funds, and whether reinsurers or other market participants are subject to different regimes. These issues can delay payment even where coverage is otherwise accepted. However, insurers need to dis- tinguish genuine legal impediments from general cau- tion. Section 13A of the Insurance Act 2015 expressly recognises that factors outside the insurer’s control may be relevant to reasonable time, but such factors do not create a blanket defence to delay. Policyholders are likely to seek clear explanations, sanctions analysis and evidence of steps taken to resolve payment obstacles. Disputes may therefore concern both coverage and the reasonableness of the claims handling process. 7.3 War, Political Risk and Exclusions War, terrorism and political risk exclusions are being tested by modern events that do not always resem - ble traditional armed conflict. Cyber operations, sanctions, detention of assets, political violence, civil unrest and state-backed disruption can all raise ques- tions about how older exclusionary language applies. The key issue is often characterisation. Was the proxi- mate cause war, confiscation, political violence, ter- rorism, cyber war, government action or ordinary com- mercial failure? The answer may determine whether a specialist war or political risk policy responds, whether a mainstream property or liability policy excludes the loss, and how limits or aggregation provisions apply. The market is responding with more specific exclu- sions and affirmative grants of cover. In cyber, Lloyd’s market clauses and cyber war exclusions have pushed parties to address attribution and state involvement more directly, although factual attribution remains dif- ficult in practice.
256 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook