Conflicts in politically unstable regions and heightened global security concerns are expected to elevate exposure both for airlines operating near conflict zones and others with insurable interests. Additionally, extreme weather events such as hurricanes, wildfires, and flooding are becoming more frequent, impacting airport infrastructure and aircraft operations. These combined risks are likely to push insurers to raise premiums, particularly for war risk and hull coverage, and impose stricter territorial exclusions for carriers flying over or near sanctioned or high-risk areas. Recent events have shown how rapidly this can change.

In September 2025, the UK Civil Aviation Authority published the electric Vertical Take-Off and Landing (eVTOL) Delivery Model in anticipation of commercial flight operations by the end of 2028.  The Delivery Model provides a regulatory framework addressing certification, pilot licensing, vertiport integration, and operational approvals.  The pioneering technology of eVTOLS represents a bold step toward a cleaner, smarter future for aviation — one that not only accelerates decarbonisation but redefines how we connect and move across the globe. eVTOL assembly and battery production facilities have been established in the UK to support certification and early production.  By positioning itself at the forefront of aerospace innovation, the UK seeks to unlock new possibilities for sustainable travel and economic growth. As we edge towards commercial eVTOL operations, this is dialling up a need for a range of tailored advanced air mobility (AAM) insurance cover to include hull liability, war, passenger, cargo, third party liability, spares, hangar keeper and product liability insurance.  In 2026, we will see the London and global aviation insurance market continuing to evolve, to respond to the needs of emerging AAM technology.

As PFAS become subject to increased regulation in the United States, European Union and UK, we anticipate more related injury and environmental claims. Recent technological breakthroughs for the destruction of PFAS have provided a glimmer of hope for addressing the 'forever' impact of the chemicals from an environmental standpoint, notwithstanding their bio-accumulative nature. These removal treatments come at considerable cost, potentially borne by manufacturers responsible for environmental contamination and their insurers. In the United States, settlements totalling nearly US$11 billion have been agreed to resolve one manufacturer's liability for PFAS contamination in drinking water and specific environmental claims. For injury-related actions, despite the first bellwether trial for the Aqueous Film-Forming Foams multidistrict litigation recently being postponed, we expect to see further injury-related PFAS claims in the United States and beyond. In France, activist groups have announced they are preparing to bring an action on behalf of citizens alleging injury from PFAS contamination caused by chemical and petrochemical manufacturing in the Rhone valley. In the UK, two leading claimant firms announced investigations into possible environmental and injury claims caused by PFAS contamination in North Yorkshire.

Microplastics are a significant emerging environmental and public health risk. Businesses involved in manufacturing, packaging, and food production could see heightened scrutiny, with underwriters demanding more rigorous risk disclosures and sustainability practices. Regulatory developments, such as the EU microplastics regulation, may drive insurers to adjust policy wordings and exclusions. Litigation risk will only grow as public awareness evolves, leading to class actions and reputational damage. While litigation in this area has largely focused on greenwashing and public nuisance, the next steps would be personal injury claims, which is where the traditional issues around causation start to arise.  The industry should effect a wide review of exposures now to understand the long-tail risks microplastics present.

With the advent of hotter and drier summers, workplaces are becoming increasingly susceptible to heat-stress related claims, with those working in vulnerable sectors such as agriculture, construction and frontline services particularly at risk. Without a legal maximum safe working temperature, and with increased awareness resulting in an increase in reporting of hazardous conditions, employers in high risk environments should review risk assessments and heat mitigation protocols in order to safeguard the health and safety of employees, and mitigate the risk of personal injury claims and regulatory prosecutions. Increased sun exposure is also likely to require employers to consider protective measures, including limiting the time workers spend in the open air and providing appropriate protective equipment, as well as utilising advances in wearable health monitoring devices.

While the eco-credentials for mass timber (or engineered wood products) are clear, they will continue to be perceived by insurers as a risky product. Mass timber has a degree of inherent fire resistance which can be enhanced with appropriate design and engineering, but it is nevertheless a combustible product and where disaster strikes can lead to catastrophic consequences and total loss. It is also susceptible to water damage, mould and rot. The frequency of damp or water ingress events is high. Care must be taken to ensure appropriate protection from exposure to weather during transit, site storage and indeed during the construction phase itself. As a relatively new material for large scale projects, knowledge and understanding of the properties and performance of mass timber is a developing science. Mistakes in design and installation are occurring. Further, the absence of historical data on the repair and replacement of mass timber structures makes underwriting challenging for insurers. Yet mass timber is a strong and sustainable product, and its use can be cost-efficient. Looking forward, education, training and data is needed to support the adoption of mass timber and to move away from carbon-intensive materials.

Claims against mechanical and electrical (M&E) consultants are likely to increase as greater demand for services and design creativity is required to address the effects of climate change. The UK experienced its hottest summer ever in 2025. Indeed, all five of the UK's warmest summers have occurred this century. Climate change is not on the way, it is already here, bringing with it an increased need for powerful cooling systems in both commercial and residential premises, whether new build or by way of refurbishment. Design parameters and capacity for such systems will need to adapt to the changing climate. We have already seen several large claims against M&E consultants for inadequate cooling (and heating) designs. We also predict that new building projects in the UK are likely to become subject to compulsory 'net zero' standards within the next few years. Currently, compliance with the UK Net Zero Carbon Building Standards is not obligatory, but it is unlikely to stay that way. This could well become an evolving source of claims against M&E engineers (and other construction professionals) operating in this space, given that litigation for failure to achieve net zero targets has already begun in other arenas.

The growing incorporation of technology in the construction industry and pressure to reduce energy wastage has led to increasing numbers of buildings utilising smart technology. Smart buildings include analytical tools which can predict the needs of those using the building and monitor parts and systems, flagging them for repair or maintenance. Sensors in a smart building's infrastructure can have a positive effect in terms of reducing energy usage and carbon emissions. However, smart buildings are challenging to design and build, often requiring sophisticated construction techniques and complex mechanical and electrical infrastructure which can lead to claims against the contractor and professional team if they do not meet requirements. Smart buildings are also more at risk from cyberattacks than legacy buildings: a hacker who gains access to a building's system can cause chaos.

There will be more building failures involving modular construction, the impact of which will be determined by whether and how insurers have used retained liability or series loss clauses. Modular construction was mooted as the future of construction – modules or 'pods' being parachuted onto site – enabling contractors to build quickly, often using environmentally friendly materials with cutting edge technology. The reality has often been that defects are simply replicated across site, which can be very expensive, especially if a defect only comes to light once the modules are integrated into a finished building. Insurers can limit their liability by using series loss clauses, which can be effective in these scenarios. Indeed, series loss clauses tend to be more useful than retained liability clauses, as these types of failures will often then be subject to a single excess.

Environmental and climate-related risks will remain a central threat to companies and their directors and officers. Regulatory scrutiny is intensifying, driven by evolving environmental, social and governance (ESG) frameworks, mandatory climate disclosures, and enforcement in Europe of the EU Corporate Sustainability Due Diligence Directive. Directors face growing personal exposure to claims alleging mismanagement of climate risks, misleading sustainability statements, and breaches of fiduciary duty. Litigation funders are increasingly backing climate-related actions, including greenwashing claims and shareholder claims. Regulatory bodies are also expanding their remit, targeting boards for inadequate oversight of environmental impacts. As climate risk becomes embedded in financial and operational decision-making, we anticipate a rise in complex, cross-border claims. For multinational companies, getting the balance right will be a challenge. Directors will need to ensure robust governance, transparent reporting, and proactive risk mitigation to avoid claims and exposure.

Although government and regulators have stated a continuing commitment to the development of sustainable finance, the approach to environmental, social and governance (ESG) considerations generally is now only through the lens of promoting growth and competitiveness of UK markets. It is perhaps notable that the Financial Conduct Authority (FCA) Strategy for 2025-2030, published in June 2025, makes no reference to ESG.  In March 2025, the FCA announced that it would not be proceeding with proposed diversity and inclusion requirements for regulated firms.  In August 2025, it further announced that it is considering how to streamline the existing sustainability reporting requirements on firms.  For the year ahead we expect this trend to continue, with no new regulatory initiatives and a focus on streamlining existing requirements.

Federal pre-emption arguments may clarify the prospect of further glyphosate actions against Bayer in the United States. Actions alleging a link between glyphosate and cancers have so far failed outside the United States due to a lack of expert evidence verifying a causative link. In the United States, state-based 'failure to warn' claims and the acceptance of conflicting expert evidence has resulted in substantial damages (both general and punitive) being awarded. However, the federal Environmental Protection Agency (EPA) has consistently approved glyphosate products without a cancer-related warning. Bayer argues that states cannot impose labelling requirements in excess of federal requirements. Some states agree, with North Dakota recently legislating that warning labels meeting EPA standards will be deemed sufficient. This measure effectively shields Bayer from glyphosate cancer litigation in the state. However, with conflicting circuit judicial guidance arising on this issue, Bayer has petitioned the Supreme Court, which has in turn sought the views of the Solicitor General. Further developments are expected in 2026.

Landmark climate advisory opinions issued in 2025 by the International Court of Justice and the Inter-American Court of Human Rights will prompt both litigation and regulation targeted at corporates. The opinions clarified the obligations of states to respond to the climate crisis, including the regulation of private actors such as companies. These opinions will drive activist litigation against states to implement domestic policy change and are already being cited in a South African action challenging a government decision authorising fossil fuel exploration. Businesses will find themselves in the regulatory crosshairs if states are forced to respond. In addition, the opinions themselves will likely to be used to supplement arguments used by activists and other claimants in wider climate litigation against businesses.

Buttressed by stricter limits on drinking water, sector-specific regulation and expanded reporting requirements, the regulatory environment for PFAS will become more rigorous in both the United States and the European Union. However, a diverse and fragmented approach to PFAS regulation will still exist, with a significant number of PFAS-related bills having been introduced across a wide range of states in the United States. These efforts are filling a space increasingly vacated by the federal Environmental Protection Agency (EPA). EU Member States also voted in support of a Commission proposal to ban all PFAS in firefighting foams in April 2025, with a staged transition period and sector-specific extensions. However, compliance deadlines remain uncertain. The EPA is now expected to confirm in Spring 2026 that it will be extending the compliance deadline to achieve PFOA and PFOS Maximum Contaminant Levels in drinking water from 2029 to 2031. In the European Union, the outcome of proposals for a 'universal' PFAS restriction under REACH has been postponed, with the European Chemicals Agency's scientific evaluation now scheduled to conclude by the end of 2026.