USA Law and Practice Contributed by: Christina Culver, Rhonda Thompson and L. Michael Brooks, Thompson, Coe, Cousins & Irons, LLP
8.6 Next Generation Nuclear Underwriting processes reliant upon simple, often per- functory, property inspections will no longer suffice. The insurance market must develop a more robust underwriting model which accounts for next-gener- ation technologies, transformative building materials, and business processes premised upon no-touch and no-cash exchanged technology. An insurance mar- ket leaning into an understanding of the burgeoning technologies will lead the way in underwriting, issuing policies and achieving a profit. 9. Legislative and Regulatory Key Trends 9.1 Regulatory Focus Areas and Supervisory Trends Insurance in the United States is regulated primarily at state level, co-ordinated through the National Asso- ciation of Insurance Commissioners (NAIC), which develops model laws for states to adopt. Every state has adopted unfair trade practice and unfair claims settlement statutes based on NAIC models, enforced principally by state insurance commissioners through investigations, market-conduct examinations, and penalties up to licence revocation. Artificial intelligence is the leading current focus. The NAIC’s 2023 Model Bulletin expects insurers to main- tain a documented AI systems programme addressing governance, bias testing, and vendor oversight across underwriting, pricing, and claims handling, and ties those expectations to existing unfair-discrimination laws. Several states have gone further, most notably Colorado’s regime governing external consumer data and predictive models. The NAIC is also piloting an AI evaluation tool across a dozen states to standardise supervisory review. Operational resilience and cyber- security are a parallel priority, anchored by the NAIC Insurance Data Security Model Law and its 72-hour breach-notification standard. 9.2 Forthcoming Reforms and Market Impact Bad-faith and claims-handling reform remains active at state level. Florida’s 2023 tort reform introduced a 90-day safe harbour, codified that mere negligence is not bad faith, and added an interpleader mechanism
with digital asset restoration during a mechanical fail- ure. Likewise, in the context of property resolution, poli- cies often look to appraisal provisions to resolve dis- putes about an amount of loss. The traditional poli- cy’s appraisal provision is unlikely to be sufficiently nuanced to serve as a helpful framework for resolv- ing the disputed amount of loss for a cybercrime. By way of example, the pool of qualified appraisers and umpires for a cyber-theft claim will likely be much smaller than the typical pool of appraisers and umpires for a traditional commercial property loss. Yet, policy appraisal provisions make no distinction about who is suitable and qualified to serve as an appraiser and umpire for a cyber-theft claim. 8.4 Data Centres Unlike more traditional, standalone buildings, data centres face severe insurance challenges due to their interconnected digital networks with massive concen- trations of high-value equipment. A traditional com- mercial property policy, even one operating on a sur- plus lines basis, will probably not be sufficient to cover the risks unique to this type of structure and opera- tions. In addition, due to the dearth of risk-assessment data and tools, an immediate challenge to property carriers is how to determine the appropriate premium. A single centre can cost billions of dollars to build and equip. It remains challenging to assess the rebuild cost, particularly when a carrier takes into account the repair or replacement timelines required to make serviceable specialised servers and equipment. 8.5 Social Media Risk In many ways, social media addiction and related men- tal health risks continue to rise, as does the impact on liability coverages afforded to individuals involved in these circumstances. These trends, coupled with AI, create unique opportunities for liability to arise, and test bedrock policy terms such as what constitutes an “occurrence”, what acts are “intentional”, when the actual harm is “unintended”, and what conduct is “reasonably foreseeable” in a social media arena? As social media and mental health impacts increase, so does the risk exposure to carriers.
304 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook