As the litigated claims for COVID-19 related business interruption losses complete their journeys through the Commercial Court and the appellate courts during 2025, insurers' attention will naturally switch to their own outwards reinsurance recoveries.  As losses crystallise, an ever increasing flow of claims into the reinsurance and retrocessional markets will see a spotlight fall on claims presentations to excess of loss catastrophe contracts. Underwritten on a 'Named Perils' basis, the contracts only provide cover for loss caused by the perils specifically listed as covered (in contrast with 'All Risks' coverage, which applies to loss from all causes not specifically listed as excluded). Those contracts typically provide cover for “Natural Perils, including but not limited to…” and “Non-Natural perils as follows” and a key battleground will be whether COVID-19 is a Natural Peril where the list of Natural Perils is typically limited to seismic, flood, weather, and fire related perils (i.e. natural perils that arose by way of physical natural catastrophe).

The problem of underinsurance and the application of average is worsening and professional negligence claims against insurance brokers (for the shortfall in claims payments) are expected to increase. Indeed, a recent survey found that a staggering 46% of commercial properties were likely to be underinsured, with the average shortfall in cover being 40%. There has been significant inflation in rebuild and repair costs (labour and materials) and delays are extending periods of business interruption. Claim payments are being reduced, often significantly, due to such underinsurance. A broker is not a surveyor or valuer, but is under a duty to advise clients on the need to keep the adequacy of building sums insured under regular review, as well as warning of the potential consequences of average being applied where there is underinsurance. Further, the broker must advise on an appropriate length of business interruption insurance for a client's business. Without such clear advice, clients facing shortfalls in claim payments are likely to look to their insurance brokers for compensation.

The new UK Labour government has signalled that it could be receptive to establishing a UK-domiciled captive regime. The London Market Group (LMG), with the backing of brokers, captive managers, insurers and AIRMIC, is calling for a consultation over the coming months to advance a framework to establish London as a leading captive centre, attracting international business and promoting growth. London's existing expertise in insurance creates a trusted and stable environment for new captive formations by UK companies and non-UK multinationals, as well as a skilled workforce, provided that the fiscal and regulatory conditions are favourable and competitive.  France has seen significant growth in its captive market in recent years and the UK will need to act swiftly if it wants to avoid being left behind.

The emergence of technology startups in the insurance sector will continue to grow, driven by the need for innovation in insurance distribution in response to the growing insurance culture in the Mexican market. We anticipate that they will offer more accessible products tailored to the specific demands of consumers, especially in life and health insurance, and additional coverage through affinity products.

In an extremely significant development for the insurance market, the Insurance Bill (No. 29/2017) will revoke the current chapter in the Brazilian Civil Code dealing with insurance and will regulate insurance, reinsurance and brokerage through separate legislation. The Bill was approved in the Brazilian Senate in June 2024 and sent to the Chamber of Deputies for final validation under an urgency regime. One of the main changes brought in by the draft legislation relates to claims adjustment. Insurers will have to conclude claims adjustment in 120 days for large risks and 30 days for mass risks. Failure to meet this requirement would preclude the right to reject the claim. In addition, early liquidated damages should be paid within 30 days of receipt of documentation; in cases of denial, the claim adjustment report should be disclosed to the insured. Another significant change relates to limitation. The limitation period for insurance, reinsurance and retrocession claims would be one year. Finally, for reinsurance, silence from reinsurers as to whether they accept or reject the reinsurance proposal from the cedant will be deemed as acceptance after 20 days.

In Sky v Riverstone, it was held that the main contractor, who was appointed pursuant to a JCT contract, was not insured under an owner controlled insurance programme following practical completion, because it no longer had any rights or interests in the property insured. That decision has not been appealed. Consequently, main contractors (and their brokers) will need to review and carefully consider both their construction contracts and project insurance arrangements, to fully assess their coverage and joint insurance position in respect of post practical completion losses. Failure to do so could leave them exposed to subrogated actions by project insurers. 

The demand for cyber insurance in Colombia will rise sharply due to the increase in cyberattacks and the digitalisation of business. In the coming years, companies will face higher risks related to data protection and security incidents, driving insurers to diversify their offerings in this area. This growth will be key to covering new technological vulnerabilities and ensuring business continuity.

Climate change and the occurrence of claims will continue to be a driving factor for the insurance market in Mexico. While historically the underwriting appetite for property and hydro-meteorological risks was limited to certain geographic areas, we believe that the need to develop specific products to manage risks arising from extreme and/or catastrophic weather events (especially hurricanes, floods and earthquakes) will increase.

The number and value of construction insurance claims will continue to rise. While inflation may be slowing, building costs are still expected to increase by 15% over the next five years. Recurring themes include increased borrowing costs, skilled labour shortages and higher material costs. Coupled with rampant contractor insolvency, regulatory changes under the Building Safety Act and ever increasing plant and tool theft, construction insurers could be facing challenging times. With London retaking the top spot for the most expensive place to build globally, and multiple cities across the UK and Ireland filling the top 30, the domestic market will be particularly exposed.

The new Transport Minister continues to push for motor insurance policies to become more affordable, and has launched its taskforce to "identify the factors behind rapidly rising premiums" and "agree solutions to keep costs down". The Association of British Insurers has already published its ten-point roadmap aimed at tackling costs for all drivers, and insurers are committed to better explaining how premiums are calculated and steps policyholders can take to reduce costs. The move to lower costs will pick up speed next year, especially if inflation continues to sit at around 2% per annum.

The Chancay port, planned to become the main commercial hub between Latin America and Asia, is expected to boost the insurance market in Peru significantly. With investments estimated at more than US$ 3.6 billion, its capacity to receive vessels with up to 18,000 TEU's (containers) will reduce transport times between Peru and China. In addition to its impact on maritime trade, the Chancay project has generated collateral investments in infrastructure, including hotels, clinics and transport routes, such as the bioceanic train line between Peru and Brazil. These new investments will demand an increase in property, casualty, life and health insurance, which will cover everything from port infrastructure, such as cranes and docks, to workers and related services. The need for insurance in this sector is expected to grow significantly over the next five years, benefiting insurance companies that adapt their products to the new needs of global trade and Peru's growing infrastructure.

Insurers need to be extremely careful about limitation periods when their policies are subject to French law. Article L.114-1 of the Insurance Code introduces a two-year limitation period for all actions arising from an insurance contract. Article R.112-1 of the Insurance Code requires most policies to indicate the two-year limitation period. This requirement has been extended by the Cour de cassation, which holds that the insurer is required to set out in the insurance contract the two-year limitation period, its starting points, the specific grounds for interrupting the limitation period set out in article L.114-2 of the Insurance Code, and the ordinary grounds for interrupting the limitation period set out in the Civil Code. Insurers must refer in full to the texts of the Insurance Code and the Civil Code, failing which the two-year limitation period will be unenforceable against the insured.