UK Law and Practice Contributed by: Daniel Robin and Chloe Franklin, SDV Fenchurch
8. Emerging Risks 8.1 Market Overview of Emerging Risks The most significant emerging risks are cyber and sys- temic technology failure, AI, data protection, climate and ESG, geopolitical instability, sanctions, building safety, data centre resilience and next-generation energy infrastructure. In construction, the Building Safety Act has signifi- cantly increased exposure for construction-related companies and developers in terms of the length of time they face exposure (limitation being increased from six or 12 years, to 30 years) and what losses they could be exposed too. This has created tension between the traditional basis of professional indem- nity cover (for professional services provided by that policyholder) and the exposure the policyholder may face (eg, for losses related to the professional activi- ties of a related company). These risks are influencing disputes because they test traditional policy concepts such as physical damage, occurrence, causation, aggregation, territorial limits and exclusions. Advisory work is increasingly focused on policy review before loss rather than coverage analysis after loss. 8.2 Impact of ESG on Underwriting and Insurance Litigation ESG is reshaping underwriting because insurers are asking more detailed questions about climate expo- sure, governance, supply chains, transition risk and sustainability representations. Disputes may arise from misrepresentation or non- disclosure, regulatory investigations, greenwashing claims, environmental liability and D&O exposures. The Insurance Act 2015 duty of fair presentation is rel- evant where insurers allege that material ESG-related information was not properly disclosed. 8.3 Data Protection Laws Data protection and privacy laws affect underwrit- ing, claims handling and litigation strategy. Insurers increasingly scrutinise cyber controls, data volumes, outsourcing, breach response plans and regulatory exposure.
7.4 Supply Chain and Systemic Loss Events Geopolitical disruption has created losses linked to delayed deliveries, increased costs, inability to source materials, energy price volatility, sanctions, closure of transport routes and interruption of key suppliers. These losses do not always involve physical damage, which can create coverage difficulty under traditional property and business interruption policies. Where cover exists through extensions such as deni- al of access, suppliers’ extensions, trade disruption, political risk or contingent business interruption, dis- putes are likely to focus on causation, sub-limits, wait- ing periods, territorial scope and aggregation. Systemic events also raise difficult questions about whether multiple losses arise from one occurrence, one originating cause or separate causes. The answer may affect both direct insurance and reinsurance recoveries. 7.5 Forward Outlook and Market Response Over the next 12 to 18 months, geopolitical uncer- tainty is likely to drive tighter underwriting, clearer sanctions clauses, more precise war and cyber war exclusions, closer scrutiny of supply chain exposures and greater attention to territorial limits. Policyhold- ers with multi-national operations should expect more detailed questions about counterparties, jurisdictions, logistics and reliance on critical suppliers. Disputes are likely to focus on causation, aggregation, exclusions and payment restrictions. Reinsurance dis- putes may also increase where direct insurers accept or settle claims but face recovery issues in the reinsur- ance market. Policyholders should focus on programme coher- ence. Local policies, master policies, excess layers and reinsurance arrangements should be reviewed together, because geopolitical losses often expose gaps between layers and jurisdictions.
257 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook