Six major global trends in insurance in 2020: RPC’s Annual Insurance Review

The fallout from protests such as Extinction Rebellion and the increasing popularity of ‘telemedicine’ – medicine over the internet – are just two of the major trends that are set to impact insurers in 2020, according to RPC, the City-headquartered law firm.

• How will Extinction Rebellion protests impact events insurance?
  
• Will the boom in medicine over the internet require an overhaul of insurance policies?  
• How should insurers respond to rising D&O claims relating to eco-activists?

RPC has today launched its Annual Insurance Review, which highlights the key focus areas for a wide range of different insurance sectors. Six key focus areas identified by RPC are:

• With the growth in protest movements, how should event insurers respond? 
  Protests such as Extinction Rebellion and the anti-government rallies in Hong Kong caused significant disruption in 2019. With this trend likely to continue, there is a risk of damage being caused to property, as well as events being postponed or cancelled. Event insurers will need to consider how they cover damages to property or events being cancelled or disrupted due to protests, particularly with major events such as Euro 2020 and the Olympics taking place this year. 

• How can insurers prepare for the risks presented by telemedicine? 
  Prescribing medical treatment over the internet is set to become even more popular in 2020. This shift towards remote consultations presents a unique set of risks that will require unique coverage. Insurers will have to ensure that their policy wording is appropriate in case of claims ranging from incorrect diagnoses from online consultations to technological failures.

• How should D&O insurers respond to claims from investors on ESG issues?
  Legal claims made by investors against company directors for losses due to Environmental, Social and Governance (ESG) failings are expected to rise in 2020. These may result in claims against Directors & Officers (D&O) policies. While businesses in oil and gas and other extractive industries are an obvious target, fund managers may also find themselves under increased scrutiny over the assets they buy and sell. Insurers will need to carefully review policy wordings to ensure that they cover the risks they are intended to cover.

• How will Brexit and the 2020 US election impact trade insurance?
  2020 will see the US presidential election and the UK’s exit from the European Union – just two of the major uncertainty factors in global politics and international relations. Both could significantly impact trading relations throughout the world and the trade credit insurance policies that protect the parties involved. Given the pressure on insurer protections in trade credit insurance policy wordings, insurers must monitor the finances and risk factors of their insureds.

• Supreme Court’s Morrisons data breach judgement highlights increased data breach risks
  In 2020, the Supreme Court will review the Court of Appeal’s decision that supermarket chain Morrisons is vicariously liable for a data breach carried out by a disgruntled employee. The outcome of this case will be of great significance to any organisation that processes personal data. There is potential for more ‘class action’-style claims to be brought against organisations by those whose personal data was exposed. The case also highlights the opportunity for insurers to write cyber insurance to cover the growing number of businesses affected by data breaches.

• Will the Restatement of the Law of Liability Insurance be challenged by insurers in the US? 
  The American Law Institute is a body which promotes the simplification of US law. Its project of summarising the current legal consensus on liability insurance was completed in May 2018, and has caused much controversy since. Many in the insurance industry believe the Restatement tilts the playing field heavily in favour of claimants, particularly in areas such as insurers’ duties when defending insureds from legal claims.

The Restatement has already been cited on numerous occasions by policyholders, given its heavily pro-policyholder positions. Several states have already mounted legal challenges to the Restatement since it was introduced in 2018, and insurers must also be prepared to put up a robust challenge to it where required.

Simon Laird, Global Head of Insurance at RPC says: “2020 will bring a range of challenges for insurers to meet, many of them driven by fast-paced political and cultural change.”

“Meeting the new challenges posed by large-scale protests, climate change, telemedicine and cybercrime will be key concerns for insurers worldwide in the coming year.”

“It’s likely that the risks created by the ALI’s restatement of US liability insurance law will also continue to occupy insurers with US exposure for some time to come. This is a perfect example of the increasingly global issues that affect insurers – one of the drivers for RPC’s strategic alliance with US insurance specialist law firm Hinshaw & Culbertson.”

RPC’s Annual Insurance Review can be downloaded here.