For insurance firms, the emerging and often intersecting risks in the casualty space can make for an alarming list. Those risks include climate change, social inflation, human trafficking and PFAS chemicals. Many risk experts keep an eye on the United States to understand the extent to which these challenges could become global issues.
“What we tend to find is that they start in the US,” said Mia Finsness (main picture), Markel's global executive underwriting officer for casualty.
Markel, the insurance division of the giant Markel Group, actively tracks and analyses these emerging risks at a corporate level. New York-based Finsness said PFAS is one risk her firm is “keenly focused on.”
PFAS refers to a group of more than 4,000 chemicals used in a wide range of products, including: carpets, sunscreen, cosmetics and fire-fighting foam.
“PFAS is a big one that’s been a topic for the past few years and a lot of litigation is picking up speed in the US against various defendants,” said Finsness.
She said her firm is mindful that this litigation “probably will” find its way to other countries. However, not just legal actions involving PFAS products.
“It’s the same with other mass torts, really anything involving a large multinational company issuing products, or, using products in their manufacturing process, could affect other jurisdictions as well,” said Finsness.
Finsness said human trafficking is also a significant concern in the US where companies, including hotel chains, are being accused of connections to it.
“By this I mean lawsuits against oil and gas companies for their involvement in or contributions to climate change, and then the ensuing property damage from that,” she said. “We're watching those [climate change lawsuits] very closely, because really, that would be an industry event if those were to be successful.”
A range of important climate cases are being looked at by international courts. In December, the International Court of Justice (ICJ) began hearings involving testimony from nearly 100 countries with the aim of clarifying the legal responsibilities of governments in relation to climate change.
There are also an increasing number of lawsuits, said Finsness, arising from extreme weather related events like floods and fires.
“So either property insurers subrogating against companies that maybe are alleged to have contributed to the wildfires,” she said, “or direct actions by plaintiffs, who maybe don't have enough property insurance, or aren't being fully compensated in the property market, so they're searching for deep pockets.”
Finsness said, in California, utility and vegetation management companies have been sued for very large sums. Unexpected cases are also becoming more common.
“But we also see some other quite, seemingly random, lawsuits against anyone who's alleged to have contributed to the spread of wildfires,” she said. “A couple of years ago we saw that in the Hawaii, Maui wildfires when a school was sued and the allegations were that by not cutting its grass it enabled the wildfires to spread.”
In countries like Australia, she said, underwriters are now “very attuned” to these possible issues when writing on bushfire risks.
Insurance Business asked about strikes, riots and civil commotions (SRCC) coverages. IB suggested that this insurance area seems to be getting more attention across industry media these days.
“I definitely think it is a big topic of conversation,” said Finsness, whose concern would be the knock-on effects to casualty policies.
“For example, in the US, during the Black Lives Matter protests, we saw some liability claims where there was bodily injury or property damage and the allegations were around negligent security on the part of the premises’ owners or security agencies,” she said.
The casualty expert said her firm is also seeing some claims against public entities in the US who control the police force - including “an increased prevalence” of police brutality claims.
“So those can all translate into liability claims that would affect liability insurance,” said Finsness.
She said Markel is “definitely” keeping an eye on it.
“I think what we've seen there is really a result of increased political polarization and populism,” she said. “There's just a lot of anger among ordinary people, and in the US, that's really manifesting in jury verdicts against large companies.”
Finsness said industry stakeholders are “very mindful” of the possibility of this social inflation impacting beyond the US.
To some extent, she said, the jury trials in civil personal injury lawsuits, make the US situation unique.
“But you could see a situation where judges that are politically motivated or sympathetic to plaintiffs could award larger verdicts too,” said Finsness.
This suggests these risks could become rising concerns in other countries too.
What emerging risks are you seeing? Please tell us below.
