The insurance and reinsurance industries have been shaken up by both literal and figurative climate change. While disasters and catastrophes such as wildfires and hurricanes continue to cause a whirlwind of activity for lawyers and experts across the East and West, so do allegations of harassment and misconduct in the workplace, brought-on by the #MeToo movement.
One interviewee suggested “the market is tightening, and less capital instruments are being written as investors grow increasingly concerned about the repetitiveness and severity of climate change catastrophes”. Insurance and reinsurance companies have lost more than $50 billion from natural disasters across the world in the past year alone and are on track to lose even more this year in high-level property claims based on increasingly more frequent catastrophes.
Respondents expressed that there has been “an explosion of sexual abuse and harassment cases” and a “substantial growth in the number of D&O claims being brought to attention”. One practitioner mentioned that “headline-making claims against corporates are making the big difference in exposing white-collar crime”. As the #MeToo movement remains in the global media’s gaze, securities cases and D&O claims will continue to shake up the insurance and reinsurance markets, with premiums expected to reach $2.75 billion this year.
Lawyers we spoke to raised concerns over rising premiums across the board, and as rates increase, so does the frequency of policy disputes and large-scale complex claims that insurance and reinsurance lawyers come across. Sources noted “significant cyber losses in 2019” and an uptake in direct coverage disputes regarding cyber policies. Lawyers are tasked with advising clients on “what might need to be done to comply with potential regulations which may or may not be enforced”, indicating that cyber-insurance issues are far from over. Several interviewees also highlighted that there is “considerable turmoil in the market, which is currently experiencing heightened consolidation”. A period of “intense scrutiny from regulators” is further encouraging merger and acquisition activities, so “these large, sophisticated insurance companies can bring issues to regulators and clap back when necessary”.