UK Trends and Developments Contributed by: Daniel Robin and Chloe Franklin, SDV Fenchurch
protection legislation, particularly where automated decision-making affects individuals’ rights. Insurers are likely to respond by increasing underwrit- ing scrutiny of businesses that make extensive use of artificial intelligence. Questions are likely to increas- ingly be asked regarding the nature of AI systems deployed, the governance framework surrounding their use, and the extent to which human oversight remains embedded within decision-making process- es. The trajectory bears more than a passing resemblance to the emergence of cyber risks during the early 2000s. Initially, cyber-related liabilities were assessed under existing policy structures before insurers gradually developed dedicated products and bespoke word- ing. A similar evolution appears likely in relation to artificial intelligence. In the meantime, policyholders should expect disputes concerning the application of conventional insurance products to novel AI-related losses. Climate change: expanding from physical damage to corporate accountability Climate change continues to alter the insurance land- scape in ways that extend far beyond traditional prop- erty damage claims. The most immediate impact remains the increase in severe weather events. The UK has experienced sig- nificant storm and flood losses in recent years, and such events have generated substantial claims for property damage, business interruption and infra- structure disruption. For insurers, these losses contribute to increasing claims costs and underwriting challenges. For poli- cyholders, they reinforce the importance of ensuring that property portfolios, supply chains and business continuity arrangements are sufficiently resilient to withstand climate-related disruption. However, physical losses represent only part of the emerging challenge. A significant trend internation- ally has been the growth of climate-related litigation. Claimants increasingly seek to hold governments, corporations and directors accountable for alleged
failures to manage climate risks or achieve environ- mental commitments. One of the most significant examples is Milieudefen- sie v Royal Dutch Shell . In that case, environmental groups sought orders requiring Shell to reduce green- house gas emissions. Although the Dutch Court of Appeal subsequently overturned the original judg- ment, the litigation demonstrated the willingness of courts to entertain claims founded upon corporate climate responsibilities. Similarly, ClientEarth v Shell plc involved an attempt by a shareholder activist organisation to bring deriva- tive proceedings against Shell’s directors for alleged failures in relation to climate strategy and risk manage- ment. While the claim was unsuccessful, it attracted global attention and highlighted the increasing scru- tiny applied to board-level decision-making concern- ing environmental matters. These developments have significant implications for insurance. Climate-related disputes may potentially engage not only property insurance but also D&O, professional indemnity and liability policies. They are also contributing to increased underwriting scrutiny of corporate sustainability practices, environmental governance and climate resilience planning. Climate change is therefore no longer simply a prop- erty insurance issue. It has become a strategic busi- ness risk with implications across multiple lines of insurance cover. PFAS: the insurance market’s potential next asbestos Among emerging liability exposures, few have attract- ed as much attention as perfluoroalkyl and polyfluoro- alkyl substances, commonly referred to as PFAS or “forever chemicals”. PFAS have been used extensively since the mid- twentieth century in products ranging from firefighting foams and industrial coatings to food packaging and consumer goods. Their resistance to degradation has resulted in widespread environmental contamination and increasing concerns regarding potential health implications.
261 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook