Expect COVID-related civil unrest, says RPC

Civil unrest in response to lockdowns, claims arising from the Stamp Duty holiday and emerging trends in class actions are just three of the major issues facing insurers in 2022, according to the latest Annual Insurance Review from law firm RPC.

Protests over lockdown, as well as the economic impact of the pandemic have erupted in European countries, including Belgium, the Netherlands and Austria, the firm said. With further restrictions to combat Omicron likely, political violence and property underwriters will be looking to select risks with particular caution, it suggested.

Insurance claims arising relating to the UK stamp duty holiday are also flagged, with pressure to complete property transactions quickly in order to capitalise on the holiday likely to have led to mistakes being made by some conveyancing firms.

This could lead to professional negligence claims being made against conveyancers, with insurers being asked to reimburse the entire property purchase, RPC suggested, adding that conveyancers may also face claims for having missed the cut-off point for the holiday.

Concussion litigation in rugby and other sports is set to be another major trend continuing this year, the law firm said.

A lawsuit against World Rugby, the Rugby Football Union and Welsh Rugby Union relating to claims that nine players developed chronic traumatic encephalopathy from playing the sport could have significant ramifications, RPC noted, asking whether a successful claim lead to similar claims in other sports? In addition to the potential financial impact on sports, the outcome could force insurers to limit their exposures or adjust premiums.

Other key emerging risks to watch out for this year, according to RPC, include:

  • SPAC securities class actions – 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. While claims have so far been limited to the US, some of the insurance policies impacted will be backed by the London market.
  • Growing number of ransomware attacks – 2021 was a record year for cyber-attacks, with the number of incidents doubling from the previous year. This has led to capacity issues within the cyber insurance market. Despite the number of products increasing, many insurers expect premiums to remain high, following a 73% increase in Q3 2021.

Simon Laird, global head of Insurance at RPC, said: “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.”

“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.”

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