Insurance Litigation 2026 Comparisons

Given that the vast majority of coverage disputes in Bermuda are resolved by confidential arbitration, trends are difficult to identify from reported decisions. Noteworthy disputes often arise from Bermuda-specific insurance structures, including segregated accounts used for rent-a-captive arrangements, insurance-linked securities transactions. and the separation of reserves among business lines. Coverage disputes may also concern contractual interpretation, warranties, exclusions, disclosure and misrepresentation, aggregation, and the attachment of liability.

Insurance and reinsurance contracts are interpreted under the same general principles as other commercial contracts. Policy drafting can therefore be central where the parties disagree about the scope of insuring clauses, exclusions, warranties, conditions precedent, aggregation language, or endorsements. Bermuda law also continues to apply the common-law duty of utmost good faith, including duties of disclosure and not to make misrepresentations, subject to any contractual modification.

Arbitration and mediation are the most common forms of ADR in Bermuda. Insurance and reinsurance contracts very often incorporate arbitration agreements and confidential arbitration is the prevalent means of resolving substantial insurance disputes. Mediation is also common and the Supreme Court may impose costs consequences where a party unreasonably refuses to engage in ADR. Parties often favour the opportunity for an early commercial settlement rather than formal proceedings, given ADR offers confidentiality and often cost benefits, speed, and the preservation of business relationships.

Bermuda’s conflict-of-laws rules for contracts follow the traditional English common-law approach. An express choice of governing law will generally be given effect. In the absence of an express choice, the court will seek to identify an implied or inferred choice from the circumstances or – failing that – the system of law with which the contract has its closest connection.

It is common for parties to Bermuda insurance and reinsurance contracts to select Bermuda law. Section 11(2) of the Segregated Accounts Companies Act 2000 further provides that governing instruments relating to segregated accounts are deemed to be governed by Bermuda law.

The Bermuda court will consider whether a defendant can be validly served in Bermuda or has submitted (or agreed to submit) to the jurisdiction of the Bermuda courts, including by contract. Contractual forum-selection clauses are generally approached as part of the parties’ bargain. Where a proposed defendant is outside Bermuda, the plaintiff may require leave to serve out of the jurisdiction under Order 11 of the Rules of the Supreme Court 1985.

The External Companies (Jurisdiction in Actions) Act 1885 permits a foreign company carrying out insurance business in Bermuda through an agent or branch to be sued in the name under which it carries out business, with service on its Bermuda agent or manager.

Cross-border disputes are addressed through Bermuda’s rules on jurisdiction, service out, choice of law, and recognition or enforcement. An express governing-law choice will ordinarily be respected, whereas jurisdiction may depend upon valid service, contractual submission, or steps taken in the proceedings. Foreign money judgments may be enforced under the Judgments (Reciprocal Enforcement) Act 1958 or at common law, depending on the originating jurisdiction and the satisfaction of the applicable conditions.

The Bermuda courts generally enforce arbitration agreements and may grant anti-suit injunctions to restrain proceedings brought in breach of them. The usual approach is to grant relief where the arbitration agreement is valid and binding unless the respondent demonstrates strong reasons not to do so. Relief may be granted irrespective of where the foreign proceedings were commenced or whether Bermuda is the arbitral seat. Breach of an anti-suit order may amount to contempt and a resulting foreign judgment may be unenforceable in Bermuda.

There are no specific trends or developments in how courts approach jurisdiction and choice of law in disputes involving AI systems yet. It is expected that the established contractual and conflict-of-laws principles are likely to remain the starting point, but AI disputes may make it more difficult to identify the place of the relevant conduct, the applicable law and the appropriate forum where development, deployment, data inputs, decisions and resulting loss occur in different jurisdictions.

Arbitration clauses are common in commercial insurance and reinsurance contracts concluded in Bermuda or by Bermuda-based insurers and reinsurers. The Bermuda courts generally enforce arbitration agreements and have confirmed that this should be the ordinary approach. Their pro-enforcement powers include granting anti-suit injunctions to restrain parties from acting in violation of an arbitration agreement.

Bermuda is subject to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), extended to Bermuda in 1979. Part IV of the Bermuda International Conciliation and Arbitration Act 1993 provides the statutory enforcement regime for New York Convention awards.

An award creditor applies for leave to enforce by originating summons, ordinarily on an ex parte basis, supported by affidavit evidence exhibiting the arbitration agreement and original award. Once leave is granted and the order served, the award debtor may apply to set it aside; otherwise, the award may be enforced as a judgment. The limited New York Convention grounds for resisting enforcement include matters such as public policy and the dispute’s incapability of settlement by arbitration.

Arbitration is the prevalent form of insurance dispute resolution in Bermuda and is particularly common in property and casualty, captive, excess-liability and reinsurance business. Domestic arbitrations are governed by the Arbitration Act 1986, while international arbitrations seated in Bermuda are governed by the Bermuda International Conciliation and Arbitration Act 1993, which incorporates the UNCITRAL Model Law.

Where Bermuda law governs the arbitration agreement, a Bermuda arbitration will generally be confidential. The Arbitration Act 1986 provides a right of appeal on a question of law, subject to consent or leave. There is no equivalent merits appeal under the Bermuda International Conciliation and Arbitration Act 1993 – although an award may be challenged on the limited grounds derived from the New York Convention.

A continuing area of importance is coverage involving Bermuda’s statutory segregated-account regimes. Insurers use segregated accounts for rent-a-captive solutions, insurance-linked securities transactions, and separation of reserves among business lines, and disputes arising from those structures cannot always be determined solely by reference to ordinary common-law coverage principles. Bermuda decisions in 2022 and 2023 addressed the integrity of asset and liability segregation.

Insurance and reinsurance contracts are subject to the ordinary rules of contractual construction. Terms may also be implied as a matter of law or judicial construction. Under the Segregated Accounts Companies Act 2000, specified terms are implied into contracts written by segregated accounts companies, including provisions protecting assets linked to one account from liabilities not linked to that account.

Bermuda law continues to apply the common-law duty of utmost good faith, including disclosure and misrepresentation principles, and the traditional consequences of breach of warranty.

Cyber and technology exposures may generate disputes concerning the scope of affirmative cybercover, silent cyber-exposure in traditional policies, definitions of computer systems and security failures, causation, aggregation, business interruption, dependent business interruption, data restoration costs, ransomware payments, and exclusions for war or hostile acts.

Aggregation, occurrence wording, and limits of liability can be central where a single event or connected series of events produces losses across multiple insureds, locations, periods or layers. Potential areas of dispute include the relevant unifying factor, the number of occurrences, attachment points, deductibles, exhaustion of limits and the interaction between underlying and excess cover.

Sanctions and illegality may affect whether cover attaches, whether an exclusion applies, and whether an insurer can lawfully investigate, settle or pay a claim. Bermuda insurers and financial institutions have had to address sanctions affecting Russian and Belarusian entities, as well as issues arising from Russian aircraft registered in Bermuda.

Bermuda law does not recognise a separate concept of bad faith as a basis for awarding damages against an insurer for claims handling and there are no statutory remedies specifically for late payment of insurance claims. Insurers are nevertheless regulated by the Bermuda Monetary Authority (BMA) and must conduct business prudently.

The BMA’s Insurance Code of Conduct expects insurers to implement policies requiring claims to be handled in a timely, fair and transparent manner and to avoid aggressive, coercive or discriminatory claims-handling practices.

Bermuda reinsurers are expected to consider ESG risk within their overall risk-management framework. Climate change risk has been identified by the BMA as a significant financial risk and insurers are expected to take a proactive and proportionate approach to managing and, where possible, mitigating that risk in underwriting, operations and investments.

Delegated underwriting and claims-handling arrangements are often used by Bermuda insurers and reinsurers. Those arrangements are subject to appropriate oversight as part of insurers’ risk-management and material-outsourcing obligations.

Financial-lines disputes may involve D&O, professional indemnity and financial institutions policies, including questions concerning notification, claims-made requirements, conduct exclusions, insured-versus-insured exclusions, allocation, advancement of defence costs, and aggregation. Regulatory investigations, shareholder claims, insolvencies and cross-border proceedings may increase the complexity of coverage positions.

Casualty coverage disputes may concern the scope of occurrence-based cover, trigger, allocation across policy periods, aggregation, exclusions, and the treatment of long-tail or mass claims. The Bermuda market’s international and reinsurance focus means that relevant disputes may be determined in confidential arbitration.

Coverage for defence costs is provided under many liability policies, including professional indemnity and D&O insurance. Depending on the wording, defence costs may be payable in addition to the policy limit or within it. Under Bermuda Form policies, defence-cost cover is often provided by endorsement.

Technology, AI, cyber-risk and regulatory change may generate new claims against insureds and affect the scope and cost of insurer-funded defences. Relevant exposures may include privacy and data security claims, professional negligence allegations involving automated systems, regulatory investigations, and claims concerning inaccurate or discriminatory outputs.

The increased use of remote hearings since the COVID-19 pandemic has allowed judges, overseas counsel, clients and witnesses to participate without travelling to Bermuda and may improve the efficient use of court resources and consequently cost efficiencies. Court filing fees were increased in 2024 for commercial disputes.

Bermuda has no specific third-party funding legislation, but funding arrangements are permitted and have been upheld by the courts. Third-party funding may be used by any party and in any amount. Contingency fees remain prohibited by Rule 96 of the Barristers’ Code of Professional Conduct 1981.

There is no evidence yet that AI-generated or AI-assisted claims have materially increased claims volumes in Bermuda. However, to the extent that AI-generated or AI-assisted claims are being utilised, the potential challenges include high-volume standardised complaints, unreliable or fabricated supporting material, duplication, fraud detection, data protection concerns, and the cost of verifying claims at scale.

The Contracts (Rights of Third Parties) Act 2016 permits a third party to enforce a contractual term where the third party is identified by name, class or description and the contract expressly provides in writing that the term is enforceable by that third party. Properly drafted cut-through provisions may therefore confer enforceable third-party rights.

The Third Parties (Rights Against Insurers) Act 1963 allows direct action where an insured owes a liability but is insolvent. Comparable statutory routes exist under the Motor Car Insurance (Third-Party Risks) Act 1943 and, for oil-discharge liabilities, the Merchant Shipping Act 2002.

Regulatory investigations, reputational concerns, and co-ordinated multi-claimant proceedings may influence defence strategy, including decisions on counsel, settlement, publicity, privilege, information sharing, and consistency across related claims. Insurers may respond through claims-control provisions, panel arrangements, early case assessment, and co-ordination across jurisdictions.

The Bermuda market continues to monitor the insurance consequences of geopolitical conflict and sanctions. The war in Ukraine created issues associated with Russian aircraft registered in Bermuda, while sanctions imposed on Russian and Belarusian entities required attention from Bermuda insurers and other financial institutions. These matters may affect coverage, claims handling, payment and regulatory engagement.

Canada–USA trade tensions are likely to affect the nature and complexity of Bermuda insurance disputes more than their immediately measurable volume. Tariffs and retaliatory measures may increase repair and replacement costs, disrupt integrated supply chains and increase non-payment or default risk – potentially generating disputes under property, business interruption, trade credit, surety, marine, D&O and reinsurance policies, particularly concerning causation, valuation, aggregation and policy limits. Any increase in volume is likely to be concentrated and delayed, and difficult to quantify because many Bermuda insurance and reinsurance disputes are resolved through confidential arbitration.

Evolving sanctions and restrictions on cross-border payments may delay claims investigation or settlement, prevent payment to particular persons or through particular financial institutions, and generate disputes concerning sanctions exclusions, illegality and licensing.

Recent global conflicts may test war, terrorism, cyberwar and political-risk exclusions, particularly where causation, attribution or the geographical scope of an exclusion is disputed. Relevant issues may include whether losses arise directly or indirectly from hostilities, state-backed cyber-activity, confiscation, or governmental action.

Geopolitical disruption may produce business interruption, contingent business interruption, and marine, aviation, energy and trade-credit losses, together with questions about causation and aggregation. Supply chain instability and energy price volatility may also expose gaps between physical-damage requirements and broader economic loss.

It is foreseeable that ongoing geopolitical uncertainty will affect risk selection, pricing, limits, exclusions, and claims scrutiny. Bermuda insurers may continue to review sanctions, war, cyberwar, territorial and aggregation wordings and to seek greater information about supply chains and counterparties.

Potential emerging risks include digital assets, licensed cannabis cultivation, cyberperils, AI technologies, and disputes arising from segregated account structures. The Bermuda reinsurance market is also exposed to natural catastrophes, particularly North American hurricanes. These developments may create novel coverage, regulatory and counterparty issues.

Bermuda reinsurers are required to consider ESG risk as part of their overall risk-management framework. Climate change risk has been identified by the BMA as a significant financial risk to insurers and financial stability. Insurers are expected to take a proactive and proportionate approach to managing and, where possible, mitigating climate-related risks in underwriting, operations and investments.

Since the Personal Information Protection Act 2016 became fully operative on 1 January 2025, Bermuda insurers must pay greater attention to how insureds collect, secure, transfer and respond to breaches of personal information. In underwriting, this encourages closer scrutiny of cybersecurity controls, incident-response plans, third-party providers, data sensitivity, and regulatory compliance, with corresponding effects on pricing, limits, exclusions, and information requirements. The BMA’s 2025 cyber-risk reports emphasise board oversight, third-party risk, monitoring, security controls and response and recovery arrangements.

In claims handling, cyber-incidents require prompt investigation, preservation of evidence, assessment of notification obligations, and careful management of affected individuals, regulators and vendors. Litigation and coverage strategy increasingly focuses on causation, aggregation, business interruption, data restoration costs, ransomware payments, regulatory liabilities, and the scope of cyber, privacy, war and technology exclusions – although Bermuda-specific trends remain difficult to quantify because many insurance disputes are resolved through confidential arbitration.

The rapid growth of data centres may create property, business interruption, machinery breakdown, cyber, professional liability and environmental exposures. Relevant issues include power demand, cooling-system failure, fire, water damage, network interruption, physical security and cybersecurity issues, service dependencies, and aggregation across shared infrastructure.

There is not yet clear evidence of Bermuda-specific litigation concerning social media addiction or related mental health impacts, but international claims alleging that platform design, algorithms, and AI-driven features encourage compulsive use are emerging as a potential casualty exposure. Bermuda insurers and reinsurers may therefore scrutinise technology companies’ product design, age safeguards, governance, and historical exposure more closely, while reviewing limits, exclusions and aggregation language under general liability, product liability, technology errors and omissions (E&O), media liability and D&O policies. Claims and coverage disputes are likely to focus on causation, foreseeability, occurrence and aggregation, policy-period allocation, intentional-conduct exclusions, and defence costs.

There is not yet clear evidence of Bermuda-specific claims or reported disputes arising from small modular reactors or fusion technology. However, these developments create evolving property, construction, machinery breakdown, business interruption, environmental and third-party liability risks, alongside uncertainty concerning licensing, nuclear liability regimes, multi-unit aggregation, supply chains, waste management, and decommissioning. Existing insurance frameworks were largely designed for conventional reactors, while the appropriate coverage for smaller or non-traditional designs may vary according to reactor size, technology, fuel, coolant, and operating model.

The BMA supervises insurers’ prudent conduct of business and has wide-ranging enforcement powers. Its Insurance Code of Conduct expects timely, fair and transparent claims handling and requires insurers to avoid aggressive, coercive or discriminatory practices. Bermuda insurers must also address capital, solvency, governance and risk-management requirements, including climate-related financial risk.

The BMA has proposed reforms covering expanded conduct-of-business requirements, AI governance, internationally active insurance groups, parametric special purpose insurers, and a phased resolution regime. These are likely to strengthen governance, disclosure and oversight of automated or outsourced claims processes, as well as encouraging clearer policy wordings and resolution planning, rather than immediately changing Bermuda’s established coverage principles.