UK Trends and Developments Contributed by: Daniel Robin and Chloe Franklin, SDV Fenchurch
limited recovery. These provisions have significantly increased legal uncertainty regarding the extent of potential liability and the parties ultimately responsible for remediation costs. For insurers, the implications have been considerable. Professional indemnity insurers have already expe- rienced sustained claims activity arising from clad- ding, fire-safety and building-defect disputes. The extension of limitation periods creates the prospect of claims emerging many years after projects were completed, often in circumstances where records may be incomplete and responsibility contested. Ques- tions frequently arise regarding which policy years are relevant, the applicability of exclusions, aggregation issues and the allocation of responsibility between multiple parties involved in a project. The impact has been particularly acute in the profes- sional indemnity market. Certain areas of construc- tion-related risk, particularly those involving fire safety, cladding and external wall systems, have become increasingly difficult and expensive to insure. Some insurers have reduced capacity, imposed broad exclu- sions or withdrawn from particular sectors altogether. Higher premiums, increased self-insured retentions and more restrictive cover have become common features of the market. In parallel, insurers are placing greater emphasis on risk management, governance and quality assurance during the underwriting process. Businesses involved in construction projects are increasingly required to demonstrate robust design controls, effective record- keeping, clear contractual risk allocation and compre- hensive compliance procedures. Those organisations able to evidence strong governance and building- safety practices are likely to secure more favourable insurance outcomes than those unable to demon- strate similar controls. The Building Safety Act also illustrates a broader trend within the insurance market. Regulatory intervention is increasingly being used to address societal concerns relating to safety, environmental protection and cor- porate accountability. As with climate-related litiga- tion and emerging environmental liabilities, insurers and policyholders are having to navigate legal frame-
works that create new avenues of liability which may not have been contemplated when existing insurance arrangements were placed. For construction businesses, developers and property owners, the key challenge will be ensuring that insur- ance programmes remain aligned with their evolving risk profile. As claims arising from historic projects continue to emerge and the practical impact of the Building Safety Act becomes clearer, disputes con- cerning coverage, aggregation and policy interpreta- tion are likely to remain a prominent feature of the construction insurance market for years to come. Looking ahead The common theme linking artificial intelligence, cli- mate change, the Building Safety Act, PFAS, cyber warfare and geopolitical instability is that each rep- resents a risk that challenges traditional assumptions about insurability. Historically, insurance disputes often focused on rela- tively discrete events affecting individual businesses. Today’s emerging risks are increasingly systemic, interconnected and global in nature. They frequently transcend industry sectors, national boundaries and conventional categories of insurance cover. Equally, there is an increasing trend towards regulatory inter- vention and the expansion of legal duties in response to societal concerns regarding safety, environmental protection, corporate governance and accountability. Major disputes are therefore increasingly arising when longstanding policy wording is applied to circum- stances that were never envisaged when the con- tract was drafted. The COVID-19 business interrup- tion litigation, the Russia aircraft claims and ongoing disputes concerning cyber warfare all illustrate this phenomenon. For policyholders, the key lesson is that risk manage- ment can no longer be viewed solely through the lens of historic loss experience. Businesses must also consider how evolving technologies, environmental pressures, regulatory developments and geopolitical developments may alter their exposure profile in the years ahead.
265 I NSURANCE L I T IGATI O N 2026
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