Alterations in regulatory frameworks constitute the most significant threat to the worldwide insurance industry.
Published on May 14, 2025
Insurance heavyweights worldwide feeling the squeeze from escalating regulatory obligations
Global Insurance Law Connect, a worldwide alliance of insurance law firms, released its seventh annual risk radar report today, the 13th of May. This report, featuring insights from 23 international law firms across five continents, outlines the regulatory, political, and legal advancements affecting their local insurance markets over the past year.
By synthesizing data from 23 countries, the 2025 Risk Radar report reveals common ground, as numerous jurisdiction-specific risks are overshadowed by transcontinental threats.
The most pressing risk observed across the five continents was shifting regulatory environments, with climate change-related insurance issues following closely, mirroring the increasingly frequent and severe natural disasters worldwide. Additionally, cyber and AI risks continue to creep at the forefront of the insurance sector's concerns.
Gillian Davidson, chair of Global Insurance Law Connect, stated, "What makes this year's Risk Radar report stand out from last year's is the pace of regulatory change. Fully fifteen of the 23 firms cite specific pieces of regulation or legislation as the most significant recent changes in their jurisdictions."
EUROPE'S REGULATORY RENAISSANCE
Numerous European-based member firms comments on the Digital Operational Resilience Act (DORA), a comprehensive EU framework that took effect in January 2025. Austrian firm Völkl Rechtsanwälte deemed DORA an "intricate regulatory act that poses massive challenges for insurers and all financial institutions."
In London, Beale & Co brought attention to the wide-ranging influence of DORA, pointing out that "even UK-based entities engaged in various financial activities capture by the Act still feel the heat from the country's Financial Conduct Authority (FCA), which stresses that insurers are lagging in ensuring 'good outcomes' in compliance with the Consumer Duty."
European firms also emphasized the rollout of the revised EU Network and Information Security Directive 2 (NIS2), a unifying cybersecurity framework across 17 critical EU sectors, as a major concern for the insurance sector. Italian member firm BTG Legal branded DORA and NIS2 as "raising the bar" for the insurance industry, which faces "increasing regulatory pressures."
REGIONAL REGULATORY REVOLUTIONS
Sydney-headquartered Sparke Helmore Lawyers pointed to Australia's growing complex regulatory landscape, with new developments like the March 2025 debut of the Financial Accountability Regime (FAR) and the impending launch of the Australian Prudential Regulation Authority's (APRA) Risk Management Regime putting additional compliance and accountability pressures on the Australian insurance market.
New Zealand law firm Duncan Cotterill raised the same points, mentioning that major regulatory revolutions are taking shape with the enactment of the Contracts of Insurance Act 2024 and the forthcoming Financial Markets (Conduct of Institutions) Amendment Act 2022, effective in June of this year.
China's intensifying ESG regulatory framework has escalated obligations on insurers to "lead with transparency and innovation," according to Chinese member firm Buren. In Brazil, the insurance market grapples with legal and regulatory ambiguity, as insurers and foreign reinsurers must work tirelessly to adjust to the uncertain environment in the coming years, as reported by Santos Bevilaqua Advogados.
Reflecting on the impacts of climate change underscored throughout the report, Davidson commented, "As climate change's devastation spreads across the world and the insurance arena, there will be a growing need for international cooperation, insights, and assistance to guarantee strong, effective responses."
In the context of the global insurance industry, numerous firms have acknowledged the impact of changing regulatory environments, with examples such as Europe's Digital Operational Resilience Act (DORA) and the revised EU Network and Information Security Directive 2 (NIS2) posing significant challenges. Additionally, in the realm of business and finance, the Australian market is experiencing increased regulatory pressures due to the implementation of the Financial Accountability Regime (FAR) and the Australian Prudential Regulation Authority's (APRA) Risk Management Regime.
