CANADA Law and Practice Contributed by: Chris McKibbin, Avi Sharabi, Alex Valova and Douglas Treilhard, Stieber Berlach LLP
As noted with the privacy example above, the scope of the duty of care could be governed or informed by legislation. A question could then arise as to whether such claims are covered by a typical D&O policy which excludes bodily injury claims, if claims for social media addic- tion are properly characterised as a type of bodily injury claim. If these standalone mental distress claims are not bodily injury claims, then logic dictates that they would not be excluded from coverage under a D&O policy for that reason. Much will depend on the definition of bodily injury in the D&O policy at issue and how courts interpret that term in case law. 8.6 Next Generation Nuclear Traditionally, insurance for nuclear reactors was predi- cated on large-scale projects. SMRs (small modular reactors) and fusion developments are designed to produce clean energy at smaller scales. These new exposures will require underwriters and brokers to reconsider whether existing policy wordings provide adequate coverage for these new forms of energy risk. A one-size-fits-all approach to nuclear energy insurance is unlikely to work, given the significant differences between traditional nuclear energy and these emerging technologies. As such, insurers and brokers are expected to rethink how these risks are approached from underwriting and risk management perspectives. 9. Legislative and Regulatory Key Trends 9.1 Regulatory Focus Areas and Supervisory Trends Capital markets are potentially going to remain a focus for regulators, as outlined below.
• Several of the risks discussed in this article (ESG, privacy, operational resilience, etc) create broader exposure to directors and officers. Canada has 3,000 to 4,000 publicly listed companies. These companies must not only convince public investors that they are attempting to meet their compliance obligations, but also take steps to do so. They also cannot misrepresent how much they are achieving their goals. • Misrepresentation in these areas or even the appearance of such, to the extent that it reflects material fluctuations in the stock or valuation of a publicly traded company, could lead to an increase in regulatory prosecutions in Canada. • An increase in regulatory prosecutions would lead to more secondary market class actions. As noted above, the volume of such claims is increasing in Canada. While capital market regulation is well established in Canada, the new risks these technologies create will expose publicly listed companies to new risks. 9.2 Forthcoming Reforms and Market Impact The Canadian insurance industry will grapple with how it handles AI use in its underwriting and claims pro- cesses. Canada has no unified AI strategy. Insurers will have to consider a range of “patchwork” federal and provincial guidelines and mandates. Consumer transparency is likely to remain a focus of regulators. One way to do this is to ensure a certain amount of human oversight remains over any AI processes. At a provincial level, auto insurance regimes in several provinces are being reshaped, particularly in the area of accident benefits. Regulators may be tracking AI use in claims handling, specifically in coverage determinations; however, no imminent legislation affecting the use of AI in cov- erage determinations is currently expected. Regula- tory guidelines for insurance adjusters’ use of AI may become relevant in claims alleging lack of good faith.
56 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook