UK Trends and Developments Contributed by: Daniel Robin and Chloe Franklin, SDV Fenchurch
thousands of businesses simultaneously across mul- tiple jurisdictions. As organisations become increas- ingly dependent upon interconnected technology ecosystems, disputes concerning systemic cyber losses, business interruption and the allocation of risk between insurers and policyholders are likely to become increasingly prominent. Geopolitical instability In recent years, geopolitical instability has become a significant driver of insurance market change. Con- flicts, sanctions regimes, trade restrictions and politi- cal tensions are increasingly influencing underwrit- ing decisions, policy wordings and claims outcomes across multiple classes of business. What were once viewed as niche exposures affecting particular sectors have become board-level concerns for businesses with international operations, complex supply chains or cross-border investments. The continuing conflict in Ukraine remains one of the most significant events shaping the insurance landscape. The retention of hundreds of leased air- craft within Russia following the invasion gave rise to claims worth many billions of dollars and generated some of the largest insurance disputes ever brought before the English courts. The resulting litigation has required consideration of issues including sanctions, confiscation, war risks, causation and competing poli- cy structures. Beyond the aviation market, the dispute has highlighted the potential for geopolitical events to expose previously untested policy wording and create losses on an unprecedented scale. At the same time, tensions in strategically important regions continue to reinforce concerns regarding global trade and energy security. In particular, con- tinuing uncertainty surrounding the Strait of Hormuz has highlighted the vulnerability of international energy markets and the wider global economy to regional instability. A substantial proportion of the world’s oil and liquefied natural gas supplies pass through the Strait, meaning any significant disruption has the potential to affect freight costs, energy prices, manu- facturing operations and infrastructure projects across multiple jurisdictions.
For insurers, these developments are driving greater scrutiny of geopolitical exposures and encouraging more sophisticated approaches to underwriting and policy drafting. Businesses with international opera- tions are increasingly being asked to address issues such as sanctions compliance, geographic concentra- tion risk, political violence exposure and contingency planning. Insurers are also reviewing the scope of tra- ditional war, terrorism and political risk exclusions to ensure they adequately address modern geopolitical threats. Geopolitical instability is also increasingly connect- ed to cyber risk. State-sponsored cyber operations, sanctions-driven restrictions and attacks on critical infrastructure demonstrate that modern conflicts often extend beyond physical borders. As a result, policyholders should expect continued focus on the interaction between geopolitical developments and cyber, property, marine, D&O and political risk insur- ance programmes. Taken together, these developments demonstrate a broader market trend. Insurers are increasingly con- cerned with systemic geopolitical events capable of generating losses across multiple sectors and jurisdic- tions simultaneously. As geopolitical tensions remain elevated, policyholders can expect continued scrutiny of these risks during both the placement and claims process. Systemic business interruption and supply chain risk The COVID-19 pandemic fundamentally altered per- ceptions of business interruption risk. Prior to 2020, many organisations viewed large-scale disruption affecting entire sectors of the economy as a relatively remote possibility. The pandemic demonstrated that losses can arise simultaneously across thousands of businesses, irrespective of location, sector or size. The resulting litigation culminated in the FCA Test Case, Financial Conduct Authority v Arch Insurance ( UK ) Ltd and Others [2021] UKSC 1, which remains one of the most significant insurance decisions of recent years. The Supreme Court’s judgment provided authoritative guidance on the operation of numerous non-damage business interruption clauses and led
263 I NSURANCE L I T IGATI O N 2026
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