Page 18 - The Insurance Times November 2025

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US government shutdown triggers concerns over in- traditional models are being redefined
by real-time data, AI-driven risk assess-
surance stability ments, and incident response frame-

The recent US government shutdown has raised alarms within the insur- works. As global conflicts increasingly
ance and captive insurance sectors, particularly over regulatory delays and spill into the digital realm, cyber insur-
market uncertainty. With key federal agencies like the Department of the ance is being seen not just as a finan-
Treasury and the Internal Revenue Service (IRS) operating on limited staff, cial backstop, but as a critical compo-
insurance stakeholders are concerned about interruptions to regulatory nent of enterprise resilience planning.
processes, approvals, and guidance issuance.
Trends point to evolving
The shutdown is expected to stall IRS functions critical to captive insurance
structures, including the review of tax-related documentation and rulings. landscape in insurance liti-
It may also delay essential policy updates and the issuance of clarifications gation
regarding compliance and reporting, causing operational bottlenecks.
The insurance litigation landscape is
Industry experts warn that prolonged governmental inaction could erode undergoing significant transformation
market confidence and complicate long-term planning for both insurers and as evolving risks, emerging technolo-
insured businesses. The situation also highlights the need for contingency gies, and shifting consumer expecta-
frameworks to ensure insurance and financial markets remain resilient dur- tions reshape how disputes are
ing political impasses. Calls are growing for bipartisan resolution to protect handled. According to a new report,
critical financial infrastructure from recurring instability. the rise of cyber threats, climate-re-
lated claims, and AI-powered under-
writing are prompting a surge in com-
Cyber insurance demand are driving companies across sectors to plex legal battles between insurers,
seek protection through cyber policies.
spikes amid global ten- policyholders, and third parties.
Insurers are responding by tightening
sions and digital threat underwriting standards and raising One major trend is the increasing
number of class-action lawsuits and
surge premiums, especially for high-risk sec- regulatory investigations involving
tors such as healthcare, finance, and
A surge in global geopolitical tensions claims handling delays, policy exclu-
infrastructure. The evolving threat
has significantly increased the demand sions, and misrepresentation of cover-
landscape has also prompted insurers
for cyber insurance, as businesses age terms. Courts are also seeing more
to reassess coverage terms, demand
grapple with a growing wave of sophis- litigation surrounding business inter-
ticated cyberattacks. According to re- stricter cyber hygiene from clients, and ruption claims, especially post-pan-
incorporate risk-scoring tools.
cent reports, escalating state-sponsored demic, with insurers and businesses
threats, ransomware incidents, and Analysts note that the cyber insurance locked in disputes over liability and loss
vulnerabilities exposed by remote work market is entering a new phase, where assessment.

The Insurance Times November 2025 17