Insurer challenges in 2022 include civil unrest and class actions, says RPC

The latest Annual Insurance Review from law firm RPC highlights a number of issues set to impact insurers in 2022, including civil unrest in response to lockdowns and emerging trends in class action. On the issue of civil unrest due to Covid restrictions, the review notes that with further restrictions to combat the Omicron variant likely, political violence and property underwriters will be looking to select risks with particular caution. According to RPC, a growing number of class action lawsuits relating to special purpose acquisition companies (SPACs) are being filed before the merger becomes effective: “Previously they were limited to before the de-SPAC transaction was completed. Cases often derive from claims that acquisition targets misled investors about the financial viability of their product. Given the high levels of M&A activity, corporates will need to ensure that insurance policies offer protection throughout all stages of the transaction.” Other trends in class actions that insurers should keep an eye on are shareholder claims relating to cryptocurrencies and shareholder claims relating to cyberattacks, says RPC. Simon Laird, global head of insurance at RPC, commented: “As we go into 2022, coronavirus and its fallout is, unsurprisingly, still front of mind for insurers. The risk of emerging variants and prospect of further restrictions will create practical as well as pricing challenges. We are yet to feel the ripple effects from Covid, or maybe more accurately, the government's response to Covid, such as losses arising from protests, furlough fraud and insolvencies.” He added: “In addition to Covid, insurers continue to grapple with ESG and what it means for their business from a purpose, risk and opportunity perspective. We expect this to continue at pace through 2022 and to edge out Covid as the dominant topic for the year ahead.” The review also looks at regional insurance markets and what to expect in 2022. In Asia, RPC says that 2022 will be a bumpy ride for the Asian insurance market, pointing to continuing Covid-19 restrictions, potential challenges in the property market, in combination with global supply chain issues, rising energy prices, increasing inflation and the withdrawal of temporary pandemic relief measures. RPC says the continued growth of cyber claims is expected to continue into 2022 as cybercriminals continue to become more sophisticated, and Asia remains an attractive target, particularly given as it is set to overtake the US as the largest market for data centres by 2024. The review states that in Asia: “The longer-term effects of Covid-19 are likely to continue in the form of insolvencies in 2022, potentially leading to a further increase in D&O and trade credit claims. On the back of the current hard market in both sectors, we should expect further rate increases for these high-demand products, in conjunction with increased focus by insurers on policy terms and pre-inception enquiries.” However, RPC believes other lines of insurance business can expect to see diminishing rate increases as premiums stabilise. In the US, RPC says that social inflation and ESG will continue to dominate in 2022, while cyber and privacy claims will continue to mount. As for the leading D&O emerging risk areas, RPC points to cyberattacks, data loss, regulatory risks, health and safety, Covid-19, ESG, climate and employment claims. And it adds that civil unrest, riots and strikes are likely to remain the major political risks in the US.

Insurer challenges in 2022 include civil unrest and class actions, says RPC

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