SINGAPORE, August 4 – In a new report released by Allianz Global Corporate & Specialty (AGCS), the top emerging liability trends for professional services firms have been ranked, shedding light on the potential risks and challenges these firms may face in the future. The report, which focuses on professional indemnity (PI) insurance claims activity, highlights 11 trends that are expected to drive insurance claims in the industry.
The report reveals that evolving building safety laws and the rise of “hackers for hire” are two of the most critical trends impacting professional services firms. Building safety laws have come under increased scrutiny following the Grenfell Tower fire tragedy in the UK in 2017. Extended liability periods for building and fire safety defects could lead to new legal claims against manufacturers and suppliers, affecting professionals in the construction industry such as architects, engineers, and design and build contractors.
Cyber attacks also pose a significant risk to professional services firms. These firms often handle proprietary customer data and intellectual property, making them attractive targets for cyber criminals. The report highlights the increasing threat of “hackers-for-hire” who target law firms to gain access to confidential or protected data that can influence legal proceedings. Cyber breaches can result in immediate costs, disruption, regulatory exposures, and litigation from affected data subjects, as well as reputational damage.
Other trends identified in the report include geopolitical and economic volatility, inflation, and the use of new technologies such as artificial intelligence (AI) tools. Professionals acting for clients in rapidly evolving sanctions regimes may face regulatory exposures, while disruptions to supply chains can lead to claims related to project delays. Inflationary pressures can create exposures for auditors, insolvency practitioners, solicitors, valuers, lawyers, and accountants. The use of AI tools, while offering potential benefits, also presents risks such as data privacy issues, copyright concerns, and errors in machine learning tasks.
The report emphasizes the importance of proper training, supervision, and awareness among professionals to mitigate these emerging risks. It cites a recent case where a New York lawyer faced sanctions due to errors in a brief aided by an AI tool. AGCS’ analysis of PI claims over the past 20+ years shows that solicitors/lawyers and construction professionals are the most impacted by large losses, accounting for 30% and 27% of such claims, respectively.
The findings from this report serve as a valuable resource for professional services firms to identify and address potential liability risks, allowing them to better protect themselves and their clients in an evolving business landscape.
