30 December 2020
2021 will see a sharp rise in climate change litigation against companies and their executives around the world as cases begin to impact more individuals across a broader range of sectors.
Underpinning the rising concern around climate change are a range of cases – in the US more filings by cities and states seeking remediation from companies considered to be contributing to climate change impacts such as rising sea levels or increasing flood risks. In the UK, European, Canadian and Australian courts, by contrast, we are seeing more human rights cases typically brought by young people seeking to hold businesses and governments to account for failing to protect and preserve the environment for their and future generations.
In the past three years, the number of instructions received by specialist climate teams at Clyde & Co offices as far afield as London, Europe and the US has more than doubled. Re/insurers are keen to work on responses to notifications and are starting to think about the position they will want to take as potential liabilities and losses rise, not just relating to oil and gas majors, but to businesses in other sectors too.
Banks, financial institutions and other regulated industries are coming rapidly into focus as the requirements for financial disclosure become more exacting around investment in fossil fuel assets. Now that some re/insurers are starting to pull back from supporting legacy industries including oil and gas, coal and dependent infrastructure, so the carriers and reinsurers that continue to be involved with these industries can also expect to come under fiercer scrutiny.
With lobbing against climate change growing in scale, sophistication and impact, it is anticipated that the next few years will see an acceleration in the pace and scale of climate change related claims and losses and consequent coverage disputes. As the firm coordinates its activities across territories and disciplines, it has become apparent that re/insurers will need to be very clear both about their future underwriting strategy, as well as their investment strategy. Otherwise, like frogs in a warming pan, they are at risk of being overcome by the changing conditions.
View all our Insurance 2021 predictions here.
For further information, please contact:
Emma Ager, Partner, Clyde & Co
emma.ager@clydeco.com
