Underwriting and policy drafting

The insurance industry faces a complex landscape of evolving challenges that are fundamentally reshaping how policy wording professionals and underwriters approach their work in 2025 and beyond.

Regulatory complexity and compliance

Regulatory fragmentation continues to intensify across jurisdictions. The divergence between UK, EU, and international regulatory frameworks following Brexit has created significant challenges for policy drafters working across multiple markets. Underwriters must navigate increasingly sophisticated conduct risk requirements, with regulators demanding greater transparency in policy wording and heightened Consumer Duty obligations. The Financial Conduct Authority's Consumer Duty regime has necessitated wholesale reviews of policy documentation to ensure clarity and fair value, placing substantial pressure on wording teams.

Emerging risks and coverage gaps

Cyber risk remains at the forefront, with policy wording professionals struggling to keep pace with rapidly evolving threat landscapes, including AI-enabled attacks and ransomware sophistication. Climate change continues to challenge traditional underwriting models, requiring innovative policy structures that address both physical and transition risks whilst maintaining commercial viability. War and political violence exclusions are under scrutiny following recent geopolitical tensions, with underwriters reassessing territorial scope and silent cyber exposures within these clauses.

Technology and artificial intelligence

The integration of AI into underwriting processes presents both opportunities and challenges. Whilst machine learning enhances risk assessment capabilities, policy wordings must address liability questions around algorithmic decision-making and autonomous systems. Underwriters face the challenge of pricing risks they cannot fully quantify, whilst policy drafters must create flexible wordings that accommodate technological advancement without creating unintended coverage gaps or overly broad exposures.

Data and analytics challenges

The exponential growth in available data presents both opportunity and obligation. Underwriters must leverage advanced analytics whilst ensuring compliance with data protection regulations. Policy wording professionals must craft clear provisions addressing data breach notification requirements, handling of sensitive information, and the intersection between privacy regulations and claims handling processes.

Looking ahead to 2026

The remainder of 2026 will likely see continued focus on ESG-related coverage, with increasing demand for policies addressing supply chain sustainability and environmental liability. Artificial intelligence regulation will necessitate rapid policy wording evolution as legislative frameworks crystallise. Professionals must remain agile, balancing innovation with risk management whilst maintaining the fundamental clarity and certainty that insurance contracts demand.

Articles in this section include: 

• Could AI bias widen the insurance gap?
• FCA acts on home and travel insurance super-complaint. 
• The insurance industry’s battle with jargon: The fight continues.
• How geospatial data is becoming a crucial part of risk analysis.
• AI hallucinations cover launched in first wave of new insurance products for AI.
• PFAS exclusions: Are your exclusions robust enough?