UK Trends and Developments Contributed by: Daniel Robin and Chloe Franklin, SDV Fenchurch
to insurers paying billions of pounds in claims. More importantly, the litigation highlighted the difficulties that arise when traditional policy wording is applied to losses resulting from a widespread systemic event. Whilst the pandemic may have been exceptional in scale, it exposed a broader vulnerability facing mod- ern businesses. Organisations increasingly operate within highly interconnected commercial networks, relying on international suppliers, logistics provid- ers, manufacturing hubs, energy infrastructure and telecommunications systems. As a result, losses are increasingly caused by disruption occurring else- where in the supply chain rather than by damage at an insured’s own premises. Recent years have provided numerous examples of these vulnerabilities. The temporary blockage of the Suez Canal by the Ever Given in 2021 disrupted global trade routes and delayed the movement of goods worldwide. Energy market volatility following Russia’s invasion of Ukraine created disruption across manufacturing and industrial sectors dependent upon stable energy supplies. Ongoing instability affecting international shipping routes has similarly highlighted the exposure of businesses to events taking place thousands of miles from their operations. For insurers, these developments have renewed focus on concentration risk and systemic exposures capa- ble of affecting multiple policyholders simultaneously. Traditional business interruption products were gener- ally designed around physical damage occurring at a specific location. Modern losses increasingly arise from disruption to supply chains, infrastructure net- works, transportation routes and critical service pro- viders, creating difficult questions regarding causa- tion, policy triggers and the extent of cover available. Policyholders are responding by placing greater emphasis on supply-chain mapping, contingency planning and resilience measures. Increasing attention is being paid to identifying critical dependencies and understanding how disruptions might affect opera- tions across multiple jurisdictions. The broader lesson is that the nature of business inter- ruption risk continues to evolve. Future losses may
arise from climate-related events, building safety lia- bilities, geopolitical instability, infrastructure failures or other systemic disruptions that transcend traditional categories of insurance risk. As businesses become increasingly interconnected, insurers and policyhold- ers alike will need to consider whether existing insur- ance programmes remain fit for purpose in an environ- ment where disruption often originates far beyond the insured’s own operations. The Building Safety Act: reshaping construction liability and insurance The introduction of the Building Safety Act 2022 repre- sents one of the most significant developments affect- ing the UK construction and insurance markets in recent decades. While prompted by the Grenfell Tower tragedy, the legislation has implications that extend far beyond building safety regulation and has fundamen- tally altered the liability landscape facing developers, contractors, consultants and their insurers. The Act introduces a range of measures designed to improve accountability within the construction indus- try, including enhanced regulatory oversight, new duties for those involved in the design and construc- tion of higher-risk buildings, and strengthened rights for those seeking remediation of defective works. However, from an insurance perspective, some of its most profound consequences arise from the expan- sion of potential liabilities and the extension of limita- tion periods. The Building Safety Act retrospectively extended the limitation period for claims under the Defective Premises Act 1972 from six years to 30 years in rela- tion to work completed before the legislation came into force, and to 15 years for future projects. This has substantially increased the potential exposure of developers, contractors and construction profession- als to historic claims that many may previously have considered time-barred. The legislation has also introduced novel mechanisms including Building Liability Orders and Remediation Contribution Orders, which enable liabilities associat- ed with building safety defects to be pursued against associated corporate entities in circumstances where traditional corporate structures might previously have
264 I NSURANCE L I T IGATI O N 2026
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