DAC Beachcroft report looks at key insurance market topics

International law firm DAC Beachcroft has published its new Insurance Market Conditions & Trends 16/17 report, featuring the key issues and topics that the firm’s insurance experts predict are likely to have the greatest impact on the insurance market over the coming year and beyond.

To mark the 10th year of its publication, this year’s edition reflects on the legal landscape and considers how insurers can prepare for the next decade, highlighting the importance of scenario planning and the need to focus on ‘critical uncertainties’.

Helen Faulkner, head of insurance at DAC Beachcroft, said: “Many business planning strategies focus on ‘critical certainties’, which are usually high impact but do not come as a real surprise.

“Predictions in this category include the impact of legislative and cyber developments, terrorism, and the socio-demographic challenges of an ageing society.

“What is harder is predicting the ‘critical uncertainties’, as they tend to be broader, less clearly defined issues, but the ones that can have the most dramatic effects,” she continued.

“The future of the global economy and technology fall into this category—the hardest to predict but with the greatest impact. Where will the fintech revolution take us, for example, and how will artificial intelligence affect legal services and the insurance industry?”

Brexit is also mentioned in the report, with experts from the firm’s regulatory team noting that, while Brexit is probably the single dominant issue for the insurance market at the moment, it should not overshadow other topics.

DAC Beachcroft points out in the report that the timing remains uncertain and that there are a number of implications for UK law, as well as the issue of passporting.

DAC Beachcroft partner Mathew Rutter, said: “A key question is what UK financial services legislation will look like following Brexit. We think the answer is that it will look very similar to the way it does now.

“There seems little reason to expect a bonfire of regulations immediately following Brexit. For some in the market, however, the risk of the loss of passporting means that they will need to move quickly to put alternative arrangements in place.”

Key themes to emerge among the report’s 50 focused predictions, made by its insurance experts across all lines of business, include the impact of cyber attacks and the practical implications of the Insurance Act.

The report also features in-depth analysis on four key areas: connectivity and the ethics around data processing, along with what Beachcroft described as “the many-headed hydra of fraud” as well as cyber-related business interruption and regulatory developments.