Key insurance law issues highlighted in new report

Key insurance law issues highlighted in new report

27 June 2021 By Lauren Croft
Key insurance law issues highlighted in new report

A group of specialist law firms has released their third annual report on the legal, regulatory and socio-economic issues facing insurers this week.

Global Insurance Law Connect (GILC) is a network of insurance law firms focusing on insurance law and advising clients around the world. The annual Risk Radar report examines important issues facing insurers around the world and this year, covers over 20 countries.

Chairman of GILC Jim Sherwood said that the 2021 report revealed that many issues have become “universal” for lawyers and insurers around the world.

“The 2021 Radar Report has seen a marked globalisation in tone,” he said.

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“For the first time, many of the issues that our lawyers have reported as being currently critical in their markets have converged, with a truly universal focus on cyber, climate change and the impacts of the pandemic bringing new challenges to many markets.”

Partner of commercial insurance at Sparke Helmore and GILC board representative for Asia Pacific, Gillian Davidson, reflected on the Risk Radar, which brought to light how the pandemic has influenced the Australian market.

“The global issues of cyber and the impact of the pandemic particularly, resonate in Australia. Insurers and their customers have had to be quick to respond to enable business continuity and establish a stable position in the market,” she said.

“With advances in technology comes the potential for a disruptive threat landscape, characterised by significant privacy and cyber risks. As regulators step up scrutiny on privacy and cyber-security-related issues, insurers find themselves facing increased compliance as well as cyber claim costs.”

The Risk Radar report covers Australia, Belgium, Brazil, China, England and Wales, Finland, France, Germany, India, Ireland, Italy, Luxembourg, Mexico, Netherlands, Northern Ireland, Norway, Scotland, Spain, Switzerland, Turkey, Taiwan and the US. In Australia particularly, COVID-19 has impacted business interruption cover.

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In November last year, the NSW Court of Appeal rejected the argument that the repealed Quarantine Act excluded business interruption claims arising due to COVID-19. Following this, the insurance industry lodged an application for special leave that was expected to hear arguments this month. The Federal Court of Australia will also hear arguments in September this year in a case to determine the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business and the government-mandated prohibition to access business premises. COVID-19 business interruption cover remains uncertain as the industry waits for the results of these two cases.

“Business interruption losses and the uncertainty around whether policies cover pandemic-related losses continue to be contentious issues in the local market. The insurance industry recognises the importance of seeking clarity on the interpretation of further aspects of business interruption policies and is working with stakeholders and policyholders to provide resolution as quickly as possible,” Ms Davidson added.

“What has transpired as a result of the pandemic will potentially cause insurers to rethink their risk appetite, underwriting principles and policy wording construction with resultant long-term impacts across the market.”

Mr Sherwood added that the report showed the importance of insurers moving online after a year of “cultural change”.

“A subsidiary point, but one of much importance to all in our industry, is the follow-on impact of the ‘powering up’ of digital marketing, sales and claims processing, as insurance buyers around the globe move online permanently after a year of cultural change,” he said.

“In this environment, it is all the more important that different markets share approaches, regulatory challenges and stories of innovation.”

Key insurance law issues highlighted in new report
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