BERMUDA Law and Practice Contributed by: Oliver MacKay, Michael Frith, Kyle Masters and Jennifer Haworth, Carey Olsen
surers. Those arrangements are subject to appropriate oversight as part of insurers’ risk-management and material-outsourcing obligations. 4.9 Financial Lines Coverage Trends Financial-lines disputes may involve D&O, profes- sional indemnity and financial institutions policies, including questions concerning notification, claims- made requirements, conduct exclusions, insured- versus-insured exclusions, allocation, advancement of defence costs, and aggregation. Regulatory inves- tigations, shareholder claims, insolvencies and cross- border proceedings may increase the complexity of coverage positions. 4.10 Casualty Coverage Trends Casualty coverage disputes may concern the scope of occurrence-based cover, trigger, allocation across policy periods, aggregation, exclusions, and the treat- ment of long-tail or mass claims. The Bermuda mar- ket’s international and reinsurance focus means that relevant disputes may be determined in confidential arbitration. Coverage for defence costs is provided under many liability policies, including professional indemnity and D&O insurance. Depending on the wording, defence costs may be payable in addition to the policy limit or within it. Under Bermuda Form policies, defence-cost cover is often provided by endorsement. 5.2 Shifting Risk Landscape Technology, AI, cyber-risk and regulatory change may generate new claims against insureds and affect the scope and cost of insurer-funded defences. Relevant exposures may include privacy and data security claims, professional negligence allegations involving automated systems, regulatory investigations, and claims concerning inaccurate or discriminatory out- puts. 5.3 Defence Costs and Litigation Complexity The increased use of remote hearings since the COVID-19 pandemic has allowed judges, overseas 5. Claims Against Insureds 5.1 Key Exposure Areas for Insureds
counsel, clients and witnesses to participate without travelling to Bermuda and may improve the efficient use of court resources and consequently cost effi- ciencies. Court filing fees were increased in 2024 for commercial disputes. 5.4 Cost Risk Management and Funding Solutions Bermuda has no specific third-party funding legis- lation, but funding arrangements are permitted and have been upheld by the courts. Third-party funding may be used by any party and in any amount. Contin- gency fees remain prohibited by Rule 96 of the Bar- risters’ Code of Professional Conduct 1981. 5.5 AI-Driven Claims Volumes and Complaints There is no evidence yet that AI-generated or AI- assisted claims have materially increased claims volumes in Bermuda. However, to the extent that AI- generated or AI-assisted claims are being utilised, the potential challenges include high-volume standard- ised complaints, unreliable or fabricated supporting material, duplication, fraud detection, data protection concerns, and the cost of verifying claims at scale. 6. Third-Party Claims and Defence Trends 6.1 Third-Party Claims and Direct Actions The Contracts (Rights of Third Parties) Act 2016 per- mits a third party to enforce a contractual term where the third party is identified by name, class or descrip- tion and the contract expressly provides in writing that the term is enforceable by that third party. Properly drafted cut-through provisions may therefore confer enforceable third-party rights. The Third Parties (Rights Against Insurers) Act 1963 allows direct action where an insured owes a liability but is insolvent. Comparable statutory routes exist under the Motor Car Insurance (Third-Party Risks) Act 1943 and, for oil-discharge liabilities, the Merchant Shipping Act 2002. 6.2 Emerging Liability and Defence Trends Regulatory investigations, reputational concerns, and co-ordinated multi-claimant proceedings may influ-
38 I NSURANCE L I T IGATI O N 2026
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