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FOIL on climate change and technology risks

FOIL on climate change and technology risks | Insurance Business

FOIL on climate change and technology risks

When commenting on his recent appointment as the president of the Forum of Insurance Lawyers (FOIL), senior partner at Plexus Law, Anthony Baker, stated that 2020 is set to be a significant year for the forum, its members and the insurance community, as new challenges relating to climate change and technology come to the fore.

In recent years, Baker said, FOIL has developed its expertise in a broad variety of sectors and the organisation is now poised to actively engage with, and set the agenda for, topics which are continually increasing in their relevancy, such as climate change and technology.

Between the recent flooding throughout the UK and the wildfires causing widespread devastation throughout Australia, this emphasis on climate change is becoming increasing critical for the global insurance industry.

Though the discussion goes beyond just the insurance sector in terms of impact, Baker said, when discussing the subject with Insurance Business, there is no denying that climate change is having a huge impact on the industry.

Most insurers accept that different weather patterns are causing the occurrence of more flooding, as well as bushfires and adverse weather conditions in America, Canada and Australia. Baker outlined how these conditions are impacting insurance claims, with greater snowfall meaning more personal injury accidents, and dips in temperature potentially causing icy roads, rail industry difficulties and a rise in EL/PL slipping claims.

He detailed hearing from a loss adjuster contact who spent four months in the Caribbean dealing with losses arising from adverse hurricane and tornado conditions and who, despite being extremely experienced in the sector, said he has never seen anything like how climate change is now affecting losses on a daily basis.

“While climate change might be seen as a bit esoteric for FOIL, I do think it is having an impact on insurance generally and the claims generally, that we need to be considering,” Baker said. “We have to grapple with these issues in terms of lobbying because there is no doubt about it – it does affect the insurance industry and, therefore, our members.”

Beyond the challenge of climate change, Baker said, a central focus for FOIL will be the changing risk landscape afforded by technological developments within the insurance sector.

“There is an inexorable progress which is happening in terms of technology,” he said, “and whenever technology is involved there are going to be opportunities and challenges.”

Cyber risks in particular, he said, are more high profile than they have previously been in the insurance industry, and he believes insurers and brokers are still grappling with these risks, with what they need to cover and with how to price them. In today’s current climate, he stated, cyber security is an area of considerable risk.

Beyond cyber, however, Baker said there are other areas of technology which require attention including autonomous vehicles. The Automated and Electric Vehicles Act which passed in 2018, he outlined, was thin in terms of detail but it did put on to the statute book, a process for dealing with automation, as well as briefly outlining the legal framework in terms of how autonomous vehicles would act.

For London FOIL, a subsidiary of the main FOIL organisation which looks at London market issues, Baker said, technology is very much on its radar, and he outlined how a lot of FOIL members are examining how AI and automation can improve efficiencies.

Other key considerations when it comes to technology, Baker said, include factors such as e-scooters and the question of compulsory insurance for this kind of vehicle, as well as the ongoing questions surrounding the government’s online claims portal. Although this portal has been demoed, he said, the Civil Justice Rules Committee has not met to draft the rules or pre-action protocol for this portal.

That is another problem for the insurance industry, he outlined, as it is very difficult to start putting together internal systems and processes before you know the rules of the portal.

“This,” he said, “will be another challenge that we will be working hard on with the industry and the MIB to try and overcome.”