The firm’s review covers 30 insurance industry sectors across the UK and Asia
RPC has named its top three risks for the insurance sector in 2019.
Its annual insurance review finds that data breaches were likely to lead to an uptick in group litigation; Brexit means that insurers must tighten contracts; and that insurers will be reviewing policies regarding the escalating trade wars.
The international law firm has advised that insurers and the insureds work closely together to “understand how their policies are affected by these major changes to world trade relationships.”
Top three risks
- Group litigation cases driven by data breaches: It said that insurers and policyholders must be prepared for the consequences of businesses’ cyber security failings in 2019.
It said that data breaches are increasingly likely to result in large “class action”-style lawsuits meaning an uptick in group litigation.
- The impact of Brexit on supply chains and product liability insurance: Product liability insurers will need to update policies as the final Brexit deal becomes clearer.
It warned that if EU products become more expensive due to tariffs or border delays then manufacturers may switch where they source components from, meaning product standards could suddenly change.
Insurers and policy holders, therefore, must properly investigate and identify where risks might lie in a supply chain that may have to change almost overnight.
- How will US/China-style trade wars affect political risk insurance? The law firm said that political risk insurance providers will be reviewing policies this year in light of escalating trade wars.
Politically-driven impositions of taxes and tariffs can be a grey area for political risk policies, so insurers will need to work with insureds to understand how changing international trade affects investment.
Uncertainty all round
Simon Laird, global head of insurance at RPC, said: “Insurers must be ready to respond and deal with the fallout of data breaches, which are becoming more prevalent and high-profile. The worst of these can affect hundreds of thousands of people.”
“With more claimant law firms looking to bring group litigation cases, insurers may find themselves being asked to pick up the bill. As the cyber market matures it is likely to encounter growing pains such as coverage disputes.”
He added: “Unpredictable developments in international politics, such as escalating trade wars and an uncertain Brexit, could have a widespread effect on cross-border trade. Political risk and product liability insurers must therefore stay on top of any changes and be ready to update policies.”
The review covered 30 insurance industry sectors.
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