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16 May 2022
Climate change and class actions if left unchecked could be a major contributor to rising insurance costs and are key issues on the Australian risk radar, along with the pace of regulatory change, a Global Insurance Law Connect (GILC) report says.
The fourth annual Risk Radar report provides insights from law firms in 23 countries on issues that will impact insurers, with Sparke Helmore providing commentary from Australia.
“The global issues of climate change and sweeping regulatory reforms particularly resonate in Australia, while we have seen limited traction in our market from global insurance trends such as M&A activity, disruptor insurtechs and the social inflation phenomenon,” Sparke Helmore Partner and National Practice Group Leader Commercial Insurance Malcolm Cameron said.
“With the current annual cost of $38 billion attributed to natural disasters, the insurance industry is committed to a proactive approach to climate resilience, with the affordability and availability of insurance an area of focus.”
The latest report includes a contribution on New Zealand for the first time, with law firm Duncan Cotterill identifying key issues as new legislation governing insurance contracts, directors’ and officers’ (D&O) insurance in the covid environment and the response to trade and supply problems.
The GILC board says that with the pandemic largely seen as receding, many members are now considering its longer-term implications.
“Of particular concern is the risk that senior management’s decisions made during the pandemic may come under the spotlight, which will have consequences for the D&O market,” it says.
In England and Wales top issues were the climate agenda, a changing motor insurance market and customer service post-covid.
The contribution from the US identified pressures created by inflation, environment, social and governance related risks and talent retention.
The impact of the war in Ukraine was highlighted for France while challenges created by economic sanctions against Russia was a top issue for Switzerland.