Insurance Litigation 2026

This 2026 edition of the Chambers Insurance and Reinsurance Practice Guide covers changes to law and legislation which impact insurers handling claims in several jurisdictions in various continents. As with the edition last year, it also analyses both current and potential future trends. Many of those trends are replicated across multiple jurisdictions and can be summarised below.

Technology, Cyber and AI-Related Disputes

The most consistent global trend is the rapid emergence of cyber, technology and AI-related risks as a major source of insurance disputes. Jurisdictions including the UK, France, the UAE, Denmark, China and Canada all identify cyber losses, technology failures, ransomware incidents and data breaches as increasingly important sources of litigation.

There is also growing concern regarding cloud outages, software failures and failures of critical digital infrastructure, which can generate widespread business interruption losses without any traditional physical damage.

These developments have intensified debates regarding so-called silent cyber exposure. Whilst attempts have been made to clarify whether cyber-related losses are intended to be covered under traditional property, liability and financial lines policies, disputes continue to arise where losses fall between dedicated cyber policies and more traditional insurance products. Issues also arise as to whether state-sponsored cyber-attacks might be treated as an act of war and so fall within the scope of a war exclusion in a policy.

Artificial intelligence represents the next phase of this evolution. For example, France, Denmark, Canada and China all identify AI-related liability as a significant emerging exposure. Judicial consideration of AI-generated evidence has been reported and several jurisdictions have highlighted professional responsibility concerns arising from lawyers’ over-reliance on AI-generated material. The consistent line adopted by judiciary around the world is that professionals remain responsible for work produced with the assistance of AI tools. As a result, a potential increase in AI-related professional negligence claims might be anticipated. Separately, legal practitioners have highlighted that AI could help generate an increased number of claims generally (against both insureds and insurers) and insurers are already reporting an increase in notifications that appear to be the result of AI use. One aspect of this is that the use of AI tools has enabled third-party claimants more easily to generate claims than previously, which has increased the exposure of insureds, who in turn have sought to pass this on to their insurers.

Several jurisdictions also anticipate future disputes concerning automated decision-making, algorithmic bias and AI-generated professional advice, which raises issues concerning the allocation of responsibility between developers, deployers and users of AI systems. The UAE and the USA additionally report growing concerns regarding AI-generated claims, complaints and supporting evidence, raising practical questions regarding authentication, reliability and evidential standards. Canada has reported that D&O insurers face “AI washing” claims which allege that companies or directors have overstated or misrepresented AI capabilities.

The rapid growth of data centres and digital infrastructure also appears throughout the guide. Denmark, France, Japan, Mexico, Oman, the UAE and the UK in particular all identify data centres as a developing area of insurance exposure. Power failures, cooling-system breakdowns, energy supply resilience/dependence and cyber incidents are becoming increasingly important underwriting and claims considerations. Contributors also note growing concerns regarding accumulation risk, as multiple policyholders become dependent upon a relatively small number of digital infrastructure providers. Furthermore, traditional business interruption policies do not necessarily cater for interconnected data centre operations.

Climate Change and Environmental Liability

Climate-related risks continue to influence virtually every area of the insurance industry. Across multiple jurisdictions, contributors report increasing losses arising from severe weather events, flooding, environmental contamination and business interruption.

The impact has been noted by legal practitioners in multiple jurisdictions. In the UAE, severe rainfall and flooding events continue to generate significant claims activity and complex disputes concerning causation, valuation and policy scope. Oman has responded by expanding compulsory natural catastrophe protection within motor insurance, illustrating how regulators are increasingly intervening to address climate-related exposures.

There is a growing concern too regarding environmental claims involving hazardous substances such as PFAS – for example, this is a major source of coverage disputes in the USA.

Climate-related disputes frequently raise difficult questions regarding aggregation, business interruption, valuation and policy trigger. Insurers are responding through more detailed underwriting, revised exclusions, sub-limits and increasingly sophisticated catastrophe modelling.

Environmental liabilities represent another significant area of development. The growing importance of ESG-related obligations is causing particular concern. France, Denmark, the UAE, the UK and the USA all report increasing scrutiny of sustainability disclosures, climate governance and environmental reporting. Directors and officers are facing greater exposure to claims arising from alleged greenwashing, inadequate climate-risk management and failures in sustainability reporting.

While ESG litigation remains (or appears to remain, as far as it is possible to tell) relatively limited in some jurisdictions, such as India, Japan, Mexico and Oman, contributors generally expect ESG claims to become more prominent as disclosure obligations expand and regulatory scrutiny intensifies. The introduction of climate-related reporting requirements in jurisdictions such as the UAE and France is likely to accelerate this trend – the latter reports that directors are exposed to claims arising from a failure to implement credible transition plans too.

Geopolitical Instability and Global Supply Chains

Geopolitical instability and war have become one of the defining influences on insurance disputes in recent years. Contributors from various jurisdictions all identify sanctions, political violence, war-risk exposures and supply-chain disruption as increasingly important sources of litigation.

Marine, cargo and logistics insurance appear particularly affected. In the Middle East, increasing disputes concerning cargo rerouting, port congestion, storage issues, delay-related losses and the interaction between marine, construction and project insurance programmes are being reported, most especially from troubles in the Strait of Hormuz. These disputes often turn on complex questions regarding causation, timing, policy trigger and the allocation of losses between multiple policies.

The UK similarly reports substantial litigation arising from sanctions, aviation losses, political risk claims and geopolitical disruption. The aviation disputes arising from aircraft retained in Russia following the invasion of Ukraine have generated significant judicial consideration of war-risk provisions, confiscation clauses and reinsurance recoveries in recent years.

Sanctions-related disputes have also become increasingly common. Several jurisdictions report growing challenges arising from overlapping sanctions regimes and the practical difficulties associated with cross-border payments. Even where coverage is accepted, insurers may face obstacles in processing payments through international banking systems or recovering funds from reinsurers subject to different regulatory regimes.

Cyber warfare adds further complexity. Increasing attention is being turned to cyber war exclusions and questions concerning attribution. As cyber operations become more sophisticated and state involvement becomes harder to establish, disputes concerning the application of traditional war exclusions are likely to increase.

Canada has reported potential “tariff washing” claims, where companies or directors miscommunicate or omit material information regarding tariff impacts, mitigation strategies and financial implications. Companies may struggle to keep track of an ever-evolving tariff landscape.

Policy Wording; Aggregation

As with prior years, perhaps the most consistent theme across all jurisdictions is the central importance of policy wording.

Whether the dispute concerns cyber incidents, climate-related losses, supply-chain disruption, professional liability or geopolitical events, contributors repeatedly emphasise that outcomes are increasingly determined by the precise language used within policies. Several jurisdictions report growing disputes concerning exclusions, endorsements, sub-limits and the interaction between multiple policy provisions.

Aggregation has become one of the most commercially significant areas of insurance litigation. The issue arises repeatedly across multiple classes of business, including cyber insurance, professional indemnity, D&O liability, casualty claims, construction disputes and catastrophe losses and has real world impact on the value of claims.

As risks become more interconnected, aggregation disputes are likely to become even more important. Systemic cyber incidents, widespread technology failures, supply-chain disruptions and climate-related losses all have the potential to generate large numbers of related claims arising from a common underlying cause.

Claims Handling and Regulatory Intervention

Another recurring theme is the increasing scrutiny of insurer conduct and claims handling.

Several jurisdictions have reported growing judicial and regulatory interest in the manner in which insurers investigate, evaluate and resolve claims. In many jurisdictions, disputes are no longer confined to questions of coverage. Policyholders increasingly challenge the claims process itself, including delays, requests for information, communication failures and decision-making practices.

In the UK, for example, the introduction of Section 13A of the Insurance Act 2015 continues to influence market behaviour by exposing insurers to potential liability for failing to pay valid claims within a reasonable time. Similar developments are evident elsewhere. For example, the UAE and Oman appear to be potentially moving towards the introduction of reforms designed to improve transparency and claims-handling standards.

Belgium introduced legislation in 2024 requiring non-marine insurers to respond to claims within three months and to pay within 30 days after settling a claim. Financial penalties can be imposed in the event of a breach.

In the USA, contributors refer to the availability of “bad-faith” remedies in insurance litigation, which is determined at state level. A growing number of states have enacted laws creating additional penalties such as damage multipliers, recovery of legal fees and interest rates of up to 18% for insurers who have unreasonably delayed or denied payment.

Regulators are also focusing increasingly on operational resilience, cybersecurity, consumer protection and governance. Growing regulatory attention to operational controls, technology governance and customer outcomes are being reported across multiple jurisdictions. These developments are influencing both underwriting practices and litigation strategy.

Looking Ahead

The jurisdictions represented in this guide vary considerably in terms of legal systems, regulatory structures and market maturity. Nevertheless, there is remarkable consistency in some of the challenges they face.

Technology, artificial intelligence and digital infrastructure are likely to remain dominant sources of future disputes. Climate change and ESG obligations are also likely to continue to influence underwriting, governance and claims. Geopolitical instability, sanctions and supply-chain disruption are expected to remain persistent features of the risk landscape, at least in the short-term. At the same time, courts and regulators are placing increasing emphasis on policy wording, aggregation, claims handling and insurer conduct.

Against this backdrop, insurers, policyholders and their advisers are devoting greater attention to policy drafting, programme design and risk allocation before losses occur. Whilst many of the issues raised in this year’s report reflect concerns which have been raised in previous editions, the coming years are likely to see further evolution as legal frameworks strive to adapt to an increasingly complex risk environment.