US liability risks remain the biggest worry: Westfield Specialty
Despite increasing competition, underwriting discipline is broadly holding across the market. While conditions are becoming more competitive, there is little evidence of insurers chasing top-line growth at the expense of profitability.
That is according to Keith Knight, class underwriter – UK and Europe Liability, at Westfield Specialty International. Speaking to AIRMIC Today, he said that the challenges facing underwriters are so varied and complex, discipline is prevailing.
“The headwinds of geopolitical instability and volatile US exposures are reinforcing the need for careful portfolio management. As a result, sustainable insurers remain focused on disciplined growth within their existing portfolios, rather than pursuing expansion at any cost,” he said.
“At the same time, the integration of AI into underwriting and risk assessment processes is supporting more informed decision-making, helping underwriters maintain strong risk selection and pricing discipline throughout the market cycle.”
Asked what liability risks most concern underwriters, he said US exposures remain the primary driver of liability volatility, requiring underwriters to manage their portfolios carefully. “This is leading insurers to deploy their capital more selectively, with some pulling back capacity.”
He said frequency-driven auto-related incidents are easy targets for litigation and generate large losses, while increasing use of third-party litigation funding is prolonging litigation processes and driving an increasing number of nuclear and thermonuclear verdicts.
He added that PFAS and chemical-related latency risks continue to evolve into significant long-tail exposure. “This is particularly pertinent in industry sectors where these chemicals have been used extensively over many years or continue to be.”
Navigating this environment requires good decision-making. “It requires underwriters to leverage detailed, granular risk information to support sharper risk selection, more accurate pricing and the tailoring of bespoke solutions,” he said.
Another of his concerns was the growing use of AI across a wide range of products. This expands the scope of potential liability exposures, particularly in areas such as vehicles, medical devices, consumer electronics and home automation systems. “As AI becomes more embedded in decision-making, this could increase both the frequency and severity of product liability claims over time,” he said.
At the same time, underwriters must also adapt to a growing number of regulatory changes. These include the EU Product Directive, EU AI Act, and AI Liability Directive, all of which are reshaping liability frameworks and increasing scrutiny around how emerging technologies are governed, and who is accountable when AI-driven decisions lead to loss.
“While AI liability remains an emerging trend with large-scale losses yet to materialise, this will not be the case for long. As the risk continues to evolve, close collaboration with clients and brokers remains key to building a clearer picture of exposure and developing appropriate underwriting responses,” he said.
He also identified ESG risks as creating new liability challenges – and this remains a focus for liability underwriters, particularly in industries such as mining and energy where environmental and social exposures are more pronounced.
“ESG is not a new risk, but the landscape continues to evolve,” he said. “Robust underwriting strategy must be developed through client collaboration and a forward-looking outlook.”
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