Climate change, ESG responsibilities and cyber risks are just some of the key concerns facing the insurance industry in 2023, according to Reynolds Porter Chamberlain.

Report draws on the market insights of experienced RPC lawyers with extensive knowledge of the international insurance sector across important industries that drive the global economy.

Climate change, ESG, cyber and the continuing conflict in Ukraine remain centre stage for the insurance industry, creating both new opportunities for insurers and new challenges from a claims and coverage perspective.

The headwinds that the economy is creating will also prove a significant challenge. Recessions normally mean more claims against professional advisers. For insurers the challenge is establishing which professions will be most exposed this time around.

Key considerations for re/insurers include:

Cyber war exclusions

Main Challenges for Insurance Industry in 2023

The scope of cyber cover was a hot topic for 2022, with Lloyds of London announcing there will no longer be coverage for some state-backed cyberattacks from March 2023 (see Cyber Insurance, Ransomware & Hybrid Warfare Outlook).

Alongside its announcement, Lloyds produced four new Lloyd’s Market Association (LMA) clauses for use in cyber policies, which exclude cover for losses incurred due to war and/or due to cyber operations launched during war, in retaliation by specific states, or which cause major detrimental impacts to the functioning of a state.

It will wait to be seen whether 2023 is the year in which the scope of the new LMA clauses are tested, according to Cyber Insurance Trends.

In the meantime, the market will have to continue balancing the needs of the insurance market in insuring knowable risk, the needs of the commercial sector in managing the risk of cyber threats, and the mutual need to keep premiums competitive and manageable.

Sustainable insurance and Net Zero

Main Challenges for Insurance Industry in 2023

To tackle the effects of climate change and growing importance of ESG, insurers are refining their business offerings by expanding into the sustainable insurance market. As the pressure increases to adopt renewable energy sources, insurers will need to adjust their underwriting portfolios to reflect this transition (see about Insurance Sustainable Finance).

In an innovative move, Marsh launched the world’s first insurance for hydrogen projects in August 2022. As the product gains momentum, it will be interesting to see its impact on the insurance market and if other insurers will join this sector and announce their own initiatives. 

In the meantime, claims teams will need to remain agile to respond to the possibility of new types of exposures from this developing area.

Main Challenges for Insurance Industry in 2023

Climate change is continuing to result in extreme weather events with losses to international property amounting to roughly $65 billion in the first half of 2022.The rise in extreme weather events and natural disasters has become more frequent in recent years.

Climate change disasters will have a strong impact especially on the reinsurance sector, with catastrophe and other types of reinsurance expected to continue soaring.

D&O claims relating to ESG and the recession

Main Challenges for Insurance Industry in 2023

With promises of being ESG responsible, corporates and their directors will come under increasing scrutiny, with allegations pertaining to alleged “greenwashing” gaining increasing prominence (see Top 5 Risk Trends D&O Insurance Market). 

The “S” of ESG will is gaining increasing prominence with companies now required to disclose statistics on the representation of women and ethnic minorities on their boards and executive management.

Subject to how companies respond to the new requirement, disclosure related litigation could ensue (see Role of Insurance in ESG). 

As company insolvencies increase in the economic downturn directors and officers could face an increase in claims brought against them, particularly as litigation funding continues to be readily available.


AUTHOR: Simon Laird – global head of Insurance at Reynolds Porter Chamberlain (RPC)

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