Surge in Climate Litigation Could Present Risks to Insurers

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A new report from Gallagher Re highlights a wave of climate change litigation and the need for (re)insurers to assess the impact on their portfolios and risk profiles.

The report finds that litigation that was previously focused on governments and high-profile carbon intensive industrial sectors - such as the successful legal action against Shell - is now spreading to a larger swatch of companies - for example, where greenwashing claims may apply across a wide swatch of businesses and industries.

Climate activists seeking to set precedent and drive broader change are looking to involve third-party litigation funders and test new legal arguments, such as climate litigation brought under existing anti-racketeering laws.

While climate litigation has had limited success in courts to-date, insurers must monitor a growing number of cases that could set important legal precedents for how companies and directors may be held liable for climate related damages or failure to disclose risks and impacts - and how such legal actions could drive Directors & Officers (D&O) or Errors & Omissions (E&O) claims, and related disputes with insurers over coverage terms and exclusions.

As of 31 December 2022, the Sabin Center for Climate Change Law at Columbia University was tracking 1,522 cases filed in the United States and 658 filed in all other jurisdictions combined.

image: Sebastian Pichler