2024 saw the start (in October) of a twelve week trial to determine liability in relation to over 400 planes stranded in Russia since the invasion of the Ukraine in February 2022.
Whether or not the lessors benefit from cover (and if so whether it is the 'all risks' or the 'war risks' cover that should respond) remains to be determined, but liabilities have already begun to crystallise for reinsurance purposes with settlements gathering pace. As with any significant loss event discussion around the aggregation of claims will be extensive, echoing the debate around Covid-19 losses and the extent to which it can be argued the pandemic was an event/occurrence/catastrophe. It will be important to analyse case law - both historic and more recent – and the specific facts around the losses incurred to reach a landing on the appropriate loss presentation for the wording engaged.
Planes are not the only topic to reignite the aggregation debate; the potential issues around exposure to cyber risk were brought to the fore following the failure of CrowdStrike's security software in July 2024, triggered following a software update and touted as the largest IT outage in history. The losses that followed were significant and wide-reaching, with airports, airlines and financial institutions all affected and traditional loss-limiters such as geography or business line having no application.
Where estimates put around 50% of cyber premiums ceded to the reinsurance market, its importance to this rapidly developing world should not be underestimated, with interest in insurance-linked securities and cyber bonds growing in line with perceived risk. As work on cyber realistic disaster modelling advances - with early findings pointing to a reinsurance market able to absorb a systemic event (the result of a sprawling software supply chain or malware capable of self-propagating), with more targeted loss events much less of a threat in terms of (insured) losses - there is no room for complacency where research suggests that 80% of companies plan to integrate AI into their operations. And this is a risk that crosses class boundaries; those evaluating D&O exposure (for example) should be wary of the perils of 'AI-washing' – with the SEC recently charging a start up with fraud following baseless claims that its AI technically could be deployed to identify specific candidates to fulfil diversity, equity, and inclusion hiring goals – and potential issues around whether generic cyber exclusions apply, traditional limits remain fit for purpose and the scope for multiple policies to respond.
We must wait and see how traditional and well known legal concepts around aggregation, developed since the 1970s, will adapt to risks not even contemplated when the relevant judgments were handed down, but recent events have shown that the Courts are willing and able to tackle a fresh challenge and we look forward to reporting on what comes next.
To read the full section, download the Global Risks: Horizon Scanning report.
