The volume of re/insurance legal disputes has increased significantly since the COVID-19 pandemic but cases on the reinsurance side are taking time to be resolved, according to Stephen Netherway, partner at law firm Devonshires.

He told Monte Carlo Today that in the decade or so before the pandemic it had been “pretty challenging being a reinsurance lawyer” because the cases weren’t there.

“The market was flush with cash. When there were any issues, they would sit down around the table. That has now changed. The pandemic has thrown up COVID-related disputes.”

He believes that inflationary pressures have the potential to increase re/insurance disputes even further.

“We used to try and discuss with carriers, especially in the soft market, whether they should be taking a harder view of claims. But nobody really wanted to do that,” Netherway said. “Now, inflationary pressures are exacerbating disputes.”

He added that getting clarity and certainty from reinsurance disputes can be harder in the current market conditions—because few cases are going to court.

“Everyone’s in arbitration, so it’s confidential. You don’t necessarily get a court judgment. Arbitration awards aren’t binding, so it can take a long time to get judicial clarity.

“In contrast, on COVID-19 disputes the direct carriers were forced by the regulator to get a decision through the courts, for better or worse, and they got it. That meant they knew how much to pay.

“But disputes on the reinsurance side are still working their way through. There is a time lag which is not great,” he said.

Although it’s not a legal issue, the topic of data integrity is increasingly on Netherway’s agenda, which is now subject to much closer scrutiny.

“People will accept that you can use automated processes, but they want to be very confident that the data is complete and accurate. If you’re going to use an algorithm to write your risk, you want to make sure that it’s done fairly.

“If you get it wrong not only will you have unhappy people and brand damage, but you’re pricing it wrong. If your data is incomplete or it has inherent bias you’re not going to write business correctly and you might turn away business that could be profitable.”