Lawyer Monthly - June 2022

hat have been the main trends in the insurance and reinsurance markets over the last 12 months? COVID-19 has inevitably continued to have a major impact on the insurance industry over the past 12 months. In the financial lines sector, we have seen increased exposure for directors and officers as businesses have buckled under evergrowing financial pressures in what has been a challenging economic environment. Insolvencies attract shareholder and creditor scrutiny of management decisions, leaving directors vulnerable to claims. We have seen an uptick in these types of actions. D&O insurers have started to revisit the need for insolvency exclusions in their standard policy forms in order to mitigate potential exposure. Cyberattacks remain on the rise and COVID-19 has put cybersecurity firmly under the microscope. The global move to remote working, which began as an enforced measure in 2020, has become the norm for many. Greater online – and offsite – activity has presented opportunities for cyber criminals to exploit weakened IT infrastructures and prey on people’s vulnerabilities. 2021 was a breakout year for ransomware attacks as sophisticated phishing scams hit more businesses than ever before. Companies with comprehensive cyber insurance have been rewarded, and those without are taking urgent action to plug this gap in cover. We have also seen a rising demand for crypto insurance. Financial market uncertainty has led to increased demand for crypto products and insureds have looked to hedge associated risks with appropriate insurance. The US continues to lead in this sector, although supply continues to lag behind demand for these products. Understandably, insurers are cautious about pumping capacity into a market that is little understood, given the dearth of data within the crypto sphere and ongoing uncertainty about the regulatory environment. Another key trend in the insurance market (and others) has been the increased focus on engaging with ESG matters. Insurers are not alone in wanting to promote sustainable, environmentally friendly and inclusive messaging both internally and externally; employees and clients now expect this from corporates as a matter of course. This change in mindset has impacted on the risks that insurers are prepared to underwrite and at what cost. With the fast development of Insurtech, traditional insurers have also been pushed to consider the social sustainability of their products and services. Against the above, we have seen several changes in the underwriting environment. Insurers have been keen to advance their digital strategies, with use of predictive scoring, pricing and risk selection tools. This has, however, attracted the attention of regulators who are looking to establish clear, ethical rules on the use of big data and AI. There has been a push to ensure that underwriting decisions made by computer and machine learning systems The insurance market in Hong Kong has seen several interesting years of development, particularly in the past 12 months as the recently formed Insurance Authority has begun to flex its power. Antony Sassi and Carmel Green shed some light on the emerging trajectory of the insurance and reinsurance space in Hong Kong, with insights on how the sector has developed in light of the introduction of the new regulator, the COVID-19 pandemic and civil protests. W EXPERT INSIGHT 72 WWW.LAWYER-MONTHLY.COM | JUN 2022 Antony Sassi, Managing Partner Carmel Green, Partner RPC, 38/F One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong Tel: +852 2216-7101 | +852 2216-7112 12 Marina Boulevard, #38-04 Marina Bay Financial Centre, Tower 3, Singapore 018982 Tel: +65 6422-3000 | Fax: +65 6422-3099 E: Exploring the Insurance Landscapeof HongKong

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