Data breach litigation, Brexit and trade wars are insurers’ top concerns: RPC
Large-scale group litigation resulting from mass data breaches is just one of a number of growing legal risks for the insurance sector in 2019, according to law firm RPC in its 2019 Annual Insurance Review.
According to RPC, there are three key areas that insurers should pay particular attention to this year.
The first is group litigation cases driven by data breaches. Insurers and insureds must be prepared for the consequences of businesses’ cyber security failings in 2019. Data breaches are increasingly likely to result in large ‘class action’-style lawsuits. These claims, brought by claimant law firms backed by ligation funders, could be on behalf of thousands of people that are affected by a data breach
The second is 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. 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 insureds, therefore, must properly investigate and identify where risks might lie in a supply chain that may have to change almost overnight
Finally, insurers should be mindful of how US/China-style trade wars will affect political risk insurance? In 2019, political risk insurance providers will be reviewing policies 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
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.
“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.”
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