Casualty insights – global perspectives

On 22 January Kennedys global liability defense group shared their perspectives on the trends and developments expected to shape casualty risks and claims across key jurisdictions in the year ahead.

Chaired by Rory Jackson, Partner in our Edinburgh office, this interactive session brought together speakers from our APAC, EMEA, US and UK offices. Opening the discussion with reference to Kennedys Foresight: The 2026 risk landscape report, Rory highlighted the global and regional forces shaping the landscape for insurers, including artificial intelligence, geopolitical uncertainty, supply chain disruption, increasing civil awards, group actions, different methods of litigation funding, and cyber-attacks. 

Among the developments discussed were global claims inflation, online dispute resolution and mandatory mediation, third party litigation funding, Spain's new class action framework, reforms affecting institutional liability in abuse law, psychiatric injury and nervous shock claims, and certain parallels in Scotland, for example rising ‘loss of society’ awards in fatal accident claims.

Here we provide an overview of some of the key areas of discussion from the webinar.

Sean Burns, Partner, US

• In the US, a large driver of what we would classify as social inflation is in fact tied directly to outside investments of capital, which drive values, verdicts and settlements ever higher.
• A growing proportion of litigation is being funded by outside agents, a trend that is anticipated to continue in the year ahead. 
• Outside investment is now extending beyond class action litigation and is increasingly being seen in general liability claims, where such litigation is treated as an investment vehicle. 
• The challenge from a defendant perspective, is that very little disclosure into these funding arrangements is permitted. Many jurisdictions in the US do not permit the amount of outside funding in a litigated matter to be discoverable. 

Ganga Narayanan, Partner, Melbourne

• For the last twenty years litigation funding has been well established in Australia, but traditionally in the class action space. The funding of class actions has been a very attractive market for funders, providing them with high investment returns, although it is understood the advent of group cost orders – contingency fees for class actions – has impacted investment returns for funders in such claims.
• Group cost orders have changed the landscape. Whilst funders continue to fund class actions, there is also movement into other areas of litigation.
• Whilst Australia may see similar developments to those in the US, including outside funding of single plaintiff actions, there is currently a greater level of oversight and transparency of funding agreements in Australia. 
• Australian courts exercise a degree of oversight over litigation funders because class action settlements require court approval, and unlike in the US, litigation funding arrangements must be disclosed prior to the initial case management conference.  

Lucinda Lyons, Partner, Sydney

• There have been several recent reforms affecting institutional liability in abuse law. The current landscape is probably best characterised as being in a period of adjustment between judicial interpretation as well as legislative policy. 
• In 2024 the decision in Bird v DP [2024]  clarified that vicarious liability at common law remains focused on formal employer / employee relationships. Following that decision there have been many legislative responses throughout 2025 that have effectively introduced a much broader statutory requirement for institutions expanding the scope of who an organisation may be responsible for.
• Jurisdictions in the Australian Capital Territory and Victoria have moved to include relationships considered akin to employment and this broader definition may now encompass people such as contractors, volunteers, and religious leaders.
• The reforms suggest a trend towards a focus on the institution’s oversight rather than the formal employment status of the individual. The traditional distinction between employees and non-employee representatives, will now be less central to determining liability.
• Psychiatric injury and nervous shock claims are becoming increasingly prevalent. 
• Whilst a number of factors are contributing to an increase in the damages sought in psychiatric claims, one of the most significant drivers is the valuation of gratuitous domestic services. In 2026 we anticipate an increased focus on the replacement cost of non-financial support for a deceased person who provided family care, such as the childcare, and the household maintenance, which will increase the value of dependencies claims. 

Ricardo Garrido, Partner, Spain

• An absence of a specific procedural framework for class action proceedings, together with an implicit opt-in system has limited the number of class actions in Spain during the last ten years or so.
• The European Representative Actions Directive introduces a common legal framework that facilitates access for consumers to class actions by way of an opt-out system. The Directive is set to be implemented in Spain by the middle of this year and is anticipated will bring a significant increase in the number of class actions in Spain. 
• With an increase in class actions, insurers will see an increase in costs and aggregate exposures. Mediation and arbitration are options insurers will need to explore in order to seek earlier settlement of claims to mitigate against increased costs.

Patrick Yeo, Partner, Singapore

• Singapore has pivoted to the concept of asynchronous hearings, where parties do not need to be before the court, in the same session before the judge, or with the other party. One can make submissions, arguments, submit documents to the court within a given timeframe and the court will give directions and orders after having assessed all of the evidence on its merits. 
• Asynchronous hearings have most usefully been applied to early neutral evaluation – where a judge sits as a mediator in a private and confidential process within the court proceedings to assess the legal merits and evidence following submissions tendered remotely and electronically by opposing parties’ lawyers. 
• In doing so the judge as a mediator provides non-binding suggestions as to how parties should settle liability, and quantum for damages. 
• Over the last three years the legal industry has pivoted and adapted to this new way of working.  Acceptance of asynchronous hearing mediations is such that settlement is achieved via this approach in approximately 90 - 95% of cases, with the remaining cases proceeding to a physical hearing in court.

Ian Davies, Partner, UK

• In England and Wales we are certainly seeing a push towards online hearings and mandatory mediation – with regard to the latter that push is driven by significant backlogs in the civil justice system.
• We are seeing mandatory mediation for low value claims (those below £10,000), excluding injury claims and will see horizontal expansion in terms of more claims falling into the remit of mandatory mediation. 
• We anticipate we will also see a vertical increase to the next tier in the court system in England and Wales, which is £25,000 and suspect it will move to that quite quickly. 
• Mandatory mediation will bring earlier exchange of information, which in turn will facilitate the evaluation of claims sooner in the litigation process. This shift will hopefully help in reducing court backlogs and reduce exposure towards costs for insurers by claims moving through the system more quickly.