Annual insurance review 2024

Hello and welcome to RPC's Annual insurance review – a look back at the events that shaped the insurance market in 2023 and a look forward towards what to expect in 2024.

In a blessed relief from the last few years, talk of Covid has finally dissipated.  However, public health concerns have been replaced by economic pessimism, continued supply chain concerns, cyber risks, global conflict, activism around climate change and the rise of generative AI.

In last year's review we said:  "With the war in Ukraine and increasing economic headwinds vexing global policymakers, economic volatility promises to be the "new normal" in 2023."  Sorry to say, that prediction has come true.  A key theme from our business-line articles and updates from our Global Access partner firms is that of the impact caused by economic difficulties around the world.  Many jurisdictions (not least in the UK) have faced high levels of inflation and raised interest rates, causing significant claims inflation – both in terms of increased claim costs and anticipated claim volumes.

A further symptom of these global economic problems is rising insolvency rates.  In England and Wales, the last two quarters of 2023 saw the highest number of corporate insolvencies in over a decade, with this trend looking likely to continue in 2024. As ever, higher insolvency rates means a greater risk of insurance policies being called upon across a variety of business lines.  Furthermore, following a number of isolated bank failures in 2023, will 2024 see a slow burning and more widescale banking crisis develop?

Many articles discuss extreme weather events impacting various regions.  These events, previously discussed in our Reviews as "extreme", are now virtually commonplace, leading to more discussion around how the insurance market and governments can work together to manage and mitigate the damage they cause.

It is unsurprising, then, that ESG continues to be a hot topic, but the desire to gain competitive advantage through demonstration of ESG credentials has been met with an increased focus from those keen to ensure positive ESG claims stand up to scrutiny.  You can read about regulatory proceedings brought over allegations of greenwashing as well as claims from advocacy groups, including shareholder derivative actions against directors and officers for breach of fiduciary duty and violation of securities law.  (Or, conversely, of claims against companies and directors accused of ignoring profit at the expense of ESG.)

Of course, 2023 has in many respects been the year of generative AI.  Nevertheless, whilst ChatGPT's rise has been little short of meteoric, it seems likely that 2024 will see a bigger impact for the insurance market, not only with increased use of AI by insurers themselves but also among insured businesses, giving rise to new risks for the market to anticipate, assess and respond to. 

AI is also expected to be used in both perpetrating and defending against cyber-attacks, which continue to occur at record levels internationally. 

The European Commission has been the first to propose regulation of AI, but this is just the latest in a seemingly relentless drive for more regulation across many sectors.  (For example, in the UK, the introduction of the FCA's "Consumer Duty" and the Economic Crime and Corporate Transparency Act 2023.)

You can find further detail about all these issues, and more, on a sector-by-sector basis below.  You can also see international highlights by jurisdiction, with contributions from our Global Access partner firms.  Or, of course, you can simply download the whole Review in full and enjoy it at your leisure!

As always, developing areas of risk offer both threats and opportunities for the insurance market, and RPC and all the Global Access firms look forward to working with you to mitigate the former and to take advantage of the latter in 2024.

To find out more, explore this year's highlights below or download the full Review.