In recent years, the global momentum toward renewable energy has been widely celebrated as a critical pathway to combating climate change. However, a noticeable shift in this dynamic is emerging, leading to a resurgence in oil and gas exploration activity worldwide. This trend reflects changing policy stances, economic realities, and evolving market conditions that complicate the clean energy transition. While the Trump administration’s rollback of environmental regulations drew significant attention, the shift is broader and more nuanced. For instance, Lloyd’s of London’s new chief executive recently signalled a pragmatic approach by stating that the insurance market will not outright ban polluting industries, emphasising a more balanced and economically driven transition. This stance echoes growing concerns about the marginal profitability of renewables, which, despite technological advances, often struggle with high capital costs and intermittent returns. As a result, investment in upstream oil and gas exploration and downstream infrastructure is experiencing a notable uptick. Companies are expanding construction activity related to extraction, processing, and transportation, driven partly by persistent demand and geopolitical uncertainties. This is likely to translate into increased insurance claims activity in the fossil fuel sector.

Worldwide political instability and geopolitical conflict will increase the risk of losses affecting energy infrastructure built at sea, such as offshore wind installations and undersea pipelines. The Nord Stream and Baltic connector losses were a wake-up call for all governments and the insurance market. This in turn puts pressure on the market to insure these subsea infrastructures at the risk of major losses disrupting the (re)insurance market. The resulting exclusion by (re)insurers of forms of state-sponsored sabotage from subsea energy insurance risks and other critical infrastructure will create a gap in the market. Nevertheless, offshore/subsea infrastructures will continue to become increasingly important for the energy industry and further investment will be critical, especially to ensure that counter-measures are put in place to prevent large scale losses from occurring.

Asia has significant potential to develop solar photovoltaic (PV) and wind projects and there continues to be scope for them to comprise a greater share of the region's electricity generation. However, climate change may hamper such developments due to the increased threat of extreme heavy rainfall, heatwaves, typhoons/cyclones and earthquakes. For example, in March 2025, a 7.7 magnitude earthquake struck many countries including Myanmar, Thailand and China's western regions (including Yunnan and Inner Mongolia) which are core areas of PV production, causing disruptions to the production of solar energy. With almost 50% of installed solar PV and hydropower projects, over 40% of wind turbines and more than 20% of the grid infrastructure of Southeast Asia situated in cyclone/typhoon/earthquake prone areas, the damage caused by extreme weather is likely to place an increasing strain on the ability to produce renewable electricity in the region. As a result, we anticipate an increase in claims for property damage, delays in the construction of new projects, and financial losses relating to system failures and power outages.

Germany's continued shift to renewable energy will raise demand for end-of-life liability and environmental coverage for companies involved in repowering and recycling supply chains. The end-of-life costs involved in dismantling and recycling existing energy infrastructure, whether renewable or non-renewable, will increase in coming years. Non-renewable sources are expected to decline and the early generation of renewable infrastructure is now reaching end-of-life. Organisations involved in these supply chains will need to consider any regulations for environmentally sound disposal and the appropriate insurance cover that is required. There is a significant risk that dismantling obligations and recycling processes will create environmental contamination if not carried out in an appropriate manner. Insurers need to ensure that businesses have adequate processes in place to manage the fundamental issue of hazards arising when undertaking these processes.

The world's waterways are the arteries of international trade in both raw materials and finished products. In recent years there has been significant disruption to trading patterns and to supply chains caused by global conflicts and disputes over perceived trade imbalances. While the Red Sea and the Black Sea have been obvious examples of direct effects, increasingly mercantilist trade policies are causing friction in international trade and compliance headaches for owners and operators. The risk of vessels being attacked, delayed and detained is at its highest since the Second World War. Insurers should expect to see a greater volume of claims on marine insurance policies and more requests to support owners with their operational and compliance risks. Clarity about the coverage under standard marine hull policies and war risks extensions will be essential. In 2026 the arteries of global trade will become more, not less, blocked by geopolitical instability in terms of both armed conflict and the use of trading tariffs and restrictions as an instrument of foreign policy.

The ever growing prevalence of lithium-ion batteries across a wide range of products is increasing the risk of fire losses to vessels and cargoes. Batteries have been identified as the cause of a recent spate of scrap fires on vessels leading to major casualties. The problem stems from hazardous materials, particularly batteries, being present in supposedly inert scrap cargoes due to improper disposal in household waste streams. These batteries can spontaneously ignite or cause fires during handling and transportation, leading to intense, difficult-to-extinguish blazes that endanger ships and crews. Insurers and safety organisations are issuing warnings and recommending better screening and handling procedures for scrap metal cargoes. Incidents of battery fires on mega yachts are also on the rise. Mega yachts use an increasing number of lithium-ion batteries to power their advanced electronics, luxury amenities, and growing fleet of electric tenders and water toys. Incorrect use and maintenance coupled with insufficient crew training can lead to significant losses.

Challenging market conditions have led to a slowdown in M&A activity, but high-value premiums remain within reach for insurers as buyers seek greater certainty in the volatile deal making landscape. To maintain a competitive edge, transactional risk insurers are evolving their product offerings. The market is responding to growth sectors - notably technology, renewable energy, and life sciences - where emerging risks tied to intellectual property (IP) and AI are central to the target’s value and asset base. In these sectors, insurers are developing innovative solutions to address complex exposures, including bespoke coverage for IP infringement and AI-related risks. Buyers are increasingly demanding tailored representations and warranties that explicitly cover these areas, seeking robust protection and risk mitigation as part of the transaction structure. As a result, transactional risk insurance is becoming more sophisticated, with a sharper focus on the unique attributes of cutting-edge technologies.

Global tariffs, sanctions, energy insecurity, high inflation and supply-chain disruption have created the most challenging trading and economic conditions for many decades. Our interconnected world means company directors need to be aware of the different geopolitical forces at play, and how critical they are to corporate decision-making. Investment and growth strategy, employment, and legal and regulatory compliance are all potentially impacted. Diversity in the composition of the board will broaden knowledge and understanding on how best to guide companies through these economic and geopolitical uncertainties. Investment in renewable energies, AI and innovation may create silver-lining opportunities, as well as enhance corporate strength and resilience in an ever-changing world.

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.

Sanctions impacting a swathe of lines of business will keep requiring careful consideration in 2026. The past year has seen a rise in disputes related to sanctions regimes and the decisions of insureds – especially in the maritime sector. These decisions have not only related to the decisions of corporates that have breached sanctions, but also decisions made not to act pursuant to sanctions concerns (where this decision not to act has given rise to breach of contract). They have also highlighted the potential commercial liabilities of advisors (such as solicitors holding funds in escrow on behalf of parties that subsequently become subject to US sanctions) and the complexities of the (dis)application of the extraterritorial effect of certain sanctions regimes. These cases demonstrate that the English courts are increasingly subjecting the sanctions compliance decisions of businesses to high levels of scrutiny in order to assess whether they are objectively reasonable. Recent decisions indicate an increasing willingness by the courts to conclude that businesses are liable for damages in circumstances where cautious decisions are made to seek to comply with sanctions regimes of multiple jurisdictions and where the basis for those decisions might be undermined by other available evidence. Insurers need not only to be aware of the plethora of sanctions implications at play in international trade and business, but also to ensure that their decisions are thorough, well-documented and reasonable in deciding when to continue and when to hold back on the basis of sanctions breach concerns.

Dutch courts are showing a willingness to protect consumers. This is triggered by European law and seen across the legal landscape where disputes with consumers are involved. Often it concerns online transactions: travel, energy contracts, purchases etc. Caselaw shows this trend is also present in real estate where homes are rented out. Claims, or defences, that are based on general terms and conditions get the full attention of the courts. They are, as a matter of course, checked by the courts as to their fairness to the consumer.

Dutch organisation Milieudefensie has an ongoing case against Shell. They won that case at first instance but lost on appeal. It is now with the Dutch Supreme Court in The Hague, with the verdict expected in 2026. Milieudefensie in the meantime says it is preparing a new case, to prevent Shell activating new oil and gas fields, both in and outside of the Netherlands. The Dutch government is working on the introduction into Dutch legislation of the Corporate Sustainability Due Diligence Directive (2024/1760). In the meantime, Dutch law on civil liability can be used to demand specific action on climate change from individual corporations.