Insurance & Reinsurance
Emerging Risks - Social Inflation
Keep up to date on the latest emerging risks news and opinions from our industry experts
Emerging Risks include new risks that have developed in recent years but have yet to fully crystallise and those which might already exist but are difficult to quantify. They are the result of dynamic technological, societal, political, environmental, economic, scientific, legal and regulatory changes which affect us all.
On this page we bring together our insights on key areas to help you understand the latest developments and provide guidance on new opportunities and risk management.
Social inflation refers to the trend of rising insurance costs due to increased litigation, claimant-friendly judgements, and higher awards of damages. It is one of the major emerging risks the insurance industry must face in the immediate future.
Lithium batteries are a ubiquitous technology, used in everything from vaping devices to huge plants storing energy from offshore wind farms. The technology is in a state of rapid development, however, there have been many reported cases of product failures and mass recall events. Lithium technology is inescapable and presents both risk and opportunity.
The Covid-19 pandemic was a systemic shock with long-lasting consequences, including, the worst global recession in 90 years, an estimated 114 million jobs lost and a reminder of the vulnerability of our interconnected world. In the field of property insurance, the abundance of pandemic-related business interruption claims created challenges for insurance regulators, made new law and encouraged insurers to revise their ‘market standard’ wordings. Some of the most fundamental issues, are yet to be conclusively resolved.
There are more than 10,000 chemicals associated with plastic. Whilst relatively few have undergone significant research, there is a growing body of evidence about the harmful effects which plastics may cause to human health and the environment. Those involved in the manufacture, use and distribution of plastics are now the subject of active litigation by environmental activists in various parts of the world.
PFAS (per- and polyfluoroalkyl substances) are man-made chemicals which have been used in products ranging from food packaging, to waterproof clothing, to firefighting foams, for decades. Scientific research into these substances connects them with various diseases and increasing awareness of their dangers coupled with the slow pace of phasing them out of use, means that they pose a significant liability risk.
A growing body of litigation surrounds the long-term effects of repeated head traumas suffered in sport.
Vehicle automation is a hot topic for many reasons. The technology, regulatory framework, liability principles and availability of insurance are all developing rapidly.
Advertising injury cover is found as an extension of many liability policies. Rarely do claims arise. However, a growing body of ESG claims around the world has caused these extensions to be re-evaluated. Disputes have arisen in the food, finance, transport, and manufacturing sectors in which consumers and NGOs argue that companies are repeatedly making misleading claims.
Transition risk is one of the three principal categories of climate-related risk. It is the risk associated with the response to climate change, namely the policy, legal, technology and market changes which result from the transition to a lower carbon economy. Transition risk is now a widely acknowledged threat to the stability of the financial system.
Air pollution poses a major threat to health worldwide, killing an estimated seven million people each year, with 9 in 10 people inhaling air which does not meet World Health Organisation standards. Air pollution also has a catastrophic impact on our environment, causing biodiversity loss and climate change. Government authorities and businesses are facing a fast-changing legal landscape as the world reacts to the impact of air pollution and recent years have seen a steep rise in air pollution claims across the globe.
The law on pure distress claims is in a state of flux. Until relatively recently, only diagnosed psychiatric conditions could be claimed for in tort, and even then, the circumstances in which claims could be made were extremely narrow. Now several branches of the law are developing in parallel: claims for pure distress under the GDPR, claims for distress caused by invasion of privacy and, the most wide-reaching, claims under Article 8 of the European Convention on Human Rights.