Global law firm Clyde & Co has released its market predictions for the insurance industry in 2024, outlining key developments and challenges expected to shape the sector in the coming year.
The firm’s insights cover a range of issues, from the impact of AI on insurance to the opportunities and hurdles presented by Web 3.0 in the gaming industry.
In response to the economic challenges facing North Sea oil and gas producers, the UK government is navigating a delicate balance between public pressure to reduce reliance on fossil fuels and the need to ensure energy security amid rising prices.
The recent shift in the Energy Profits Levy and the threat of drilling licenses being revoked have failed to deter energy firms from considering early departures. The North Sea Transition Authority’s influence is waning, posing a risk of independent oil companies losing faith in the British regulatory regime, potentially discouraging new investors.
The US aims to accelerate offshore wind production to meet renewable energy targets, but the Jones Act and a shortage of compliant vessels pose significant obstacles.
With only one Jones Act compliant wind turbine installation vessel (WTIV) being constructed in the US, partnerships and collaborations are emerging as key solutions.
Developers are exploring resource-sharing options, and joint ventures between US and foreign developers are expected to multiply. This trend may lead to utilising foreign ports for offshore wind farm construction, presenting both challenges and opportunities for the industry.
The European Union’s Emissions Trading System (ETS) for the maritime transport industry, effective from January 1, 2024, is poised to transform the sector. Concerns about driving business away from European ports, contractual adjustments, and increased costs for customers are among the challenges.
The push for decarbonisation is likely to spur exploration of alternative fuels like methanol and ammonia, but financing options for shipowners may shrink. The International Maritime Organisation’s potential issuance of parallel decarbonisation regulations adds further complexity to an industry grappling with geopolitical uncertainties.
The rise of AI, especially generative AI, is intensifying the global need for regulatory frameworks. Discrimination bias and privacy concerns are becoming key risks, with the potential for increased litigation.
As companies rush to adopt AI technology, insurance becomes a critical component to protect against risks. The increasing use of AI tools by insurers themselves raises questions about the extent of coverage. AI-related litigation is expected to rise, prompting insurers to adopt strict policies around the use of AI platforms.
Companies adapting to incoming regulations will gain a significant first-mover advantage, creating new markets and differentiation opportunities. Regulatory compliance, particularly in areas such as climate change, is becoming complex. Energy clients focusing on regulatory adaptation will attract investment and joint venture partners.
Insurers will play a crucial role in providing capacity and expertise for emerging risks. Divergence in AI regulations globally poses challenges for multinational businesses, emphasising the importance of understanding compliance obligations across jurisdictions.
Web 3.0 offers the gaming industry new monetisation opportunities through blockchain technology, but regulatory uncertainties may lead to disputes. Ownership of in-game assets through NFTs and cryptocurrency introduces potential challenges around data privacy and asset ownership.
User-Generated Content (UGC) becomes a gray area with potential disputes over intellectual property rights. Regulatory issues surrounding cryptocurrency usage in game economies and evolving global privacy regulations present challenges for game developers and insurers. Clear contract wordings and compliance with privacy regulations become crucial elements for the gaming industry in 2024.
