Advances in autonomous vehicles and artificial intelligence will shape the claims and insurance landscape in 2025, as will the impact of the 2024 U.S. presidential election. Below, experts at Clyde & Co. share their insights on what claims and litigation professionals can expect this year.
Anticipate key federal legislation that will address accountability and standardized testing protocols for autonomous vehicles
Doug Horelick, Partner, Miami
Nanci Schanerman, Senior Counsel, Miami
"In 2025, the landscape of claims and lawsuits related to autonomous vehicle (AV) incidents is likely to evolve with the increasing presence of AVs on the roads. Level 3 AVs, which require human oversight, have been commonly observed and we are already seeing bodily injury lawsuits across the country. These are related to product liability, negligence, breach of warranty and other causes of actions against the manufacturers and the “drivers” of these vehicles. There is an expected shift towards more Level 4 AVs, where no human driver is needed in the vehicle within situationally controlled areas. This shift underscores the importance of monitoring the types of AV technology in use as it directly influences the nature and frequency of incidents.
"Currently, the regulatory approach to AVs is managed through a state-by-state approval system, which has been widely criticized for its complexity and inconsistency. However, the potential introduction of a unified federal framework by the incoming administration could significantly alter this landscape. This prospective federal legislation is anticipated to streamline the regulatory process and fast-track the deployment of AVs across the nation.
"A critical component of the federal framework will be defining how accountability is assigned following an AV incident. It is crucial to determine whether accountability will be shared among various parties such as insurers, AV manufacturers, and software developers. Clarifying this aspect of the law will be essential for managing liability and ensuring that all parties involved adhere to their responsibilities.
"Another significant element is whether the framework will standardize the testing of AVs, especially Level 5 AVs which are fully autonomous and do not require human intervention in any driving scenario."
"Currently, the allowance for testing these vehicles varies by state, creating a patchwork of regulations that can hinder the advancement and integration of this technology. A unified approach could facilitate consistent testing protocols and safety standards nationwide, accelerating the development and public acceptance of Level 5 AVs."
"Overall, these considerations will be crucial in shaping the future of autonomous vehicle technology and its integration into public roadways. The potential for increased claims and lawsuits, particularly product liability cases stemming from AV failures, highlights the need for robust and clear regulatory frameworks to manage these emerging challenges effectively."
Concerns regarding the potential for discrimination drive more cautious approach to AI underwriting
Marc Voses, Partner, New York
"As use cases for AI continue to expand across industries, insurance carriers will likely employ a more cautious approach to underwriting AI-related risks in 2025. Media conversation around AI typically centers on physical risks and potential harm to humans, concerns that are undoubtedly legitimate. But from an insurance standpoint, the industry is increasingly focused on the risk of discrimination when AI is used to provide services. The concern arises from the potential for the code forming the basis of the AI to have inherent bias. This potential for discrimination directly impacts insurance policies such as health insurance, employment practices liability, management liability, and directors and officers coverage.
"The health care services sector should be particularly vigilant to the risk of AI favoring one demographic over another. Another risk area is whether healthcare professionals will substitute their judgment for that of AI. Scrutiny of AI is therefore crucial to ensuring fairness and equity in health care delivery.
"Similarly, as we move into 2025, it is important for organizations to consider how AI impacts employment practices such as hiring, firing, retention, and development programs. We must critically assess whether these processes are administered equitably across all employees. There is a growing concern that AI algorithms could harbor biases that influence decisions on employment actions and promotions. Ensuring fairness in AI's role within these areas will be a key focus.
"Insurance will continue to play a key role in the increasing mass adoption of AI systems, with a continued lack of a federal AI regulatory framework creating a gap in guidance."
Social inflation to be impacted by conservative shifts and new legislation
Fred Fein, Partner, Miami
"In the coming year, we’ll be carefully watching for a potential shift in social inflation. The U.S. presidential election results perhaps reflected a more conservative national mindset that could reshape many aspects of social inflation, particularly through jury perspectives.
"In recent years, jury pools have become desensitized and grown accustomed to nuclear verdicts, where large nine-figure and billion-dollar awards have become the new norm. However, the emerging conservative approach, focusing on reducing spending and waste, may temper these hefty verdicts, leading to more restrained and realistic award amounts.
"On the administrative front, we should anticipate the proposal of new state and federal legislation that will likely make pursuing personal injury claims more challenging and promote basic tort reform, directly affecting social inflation. For example, currently, states vary widely in their policies on the discoverability and admissibility of litigation financing agreements, creating a patchwork of regulations. This landscape may become more uniform as new laws are introduced.
"Furthermore, the insurance industry is already showing signs of adopting a tougher stance on litigation. Insurers are increasingly refusing to succumb to outrageous demands and are more willing to go to trial, showing less concern about the risks of bad faith accusations and outsized nuclear verdicts. It will be interesting to see how these trends evolve under the influence of the new administration and the shift in public sentiment towards conservatism."
Climate litigation to be shaped by stricter regulations, increased legal scrutiny of corporate sustainability practices, and rising public demand for accountability
David Ktshozyan, Senior Counsel, Los Angeles
"By 2025, climate litigation is likely to intensify on multiple fronts, influenced by evolving legal frameworks and shifting societal expectations. Globally, international climate agreements like the Paris Climate Accord will push for more accountability. Major lawsuits may emerge targeting countries or multinational corporations failing to meet emissions reduction targets, as seen in recent cases such as the Urgenda case in the Netherlands or the ongoing complaints against fossil fuel companies for contributing to climate change.
"Nationally, countries may adopt more ambitious environmental laws, leading to an increase in lawsuits aimed at enforcing those laws. In the US, lawsuits like the one against the government for inaction on climate change or against companies for misleading the public will likely grow, especially in regions where climate policy is more aggressive. Litigation in the US will expand as states like California continue to push for stronger regulations on emissions, while other states may resist. This divergence will result in a patchwork of legal landscapes and a rise in both state-level actions and federal regulatory challenges.
"Greenwashing claims may also become more prevalent. This will likely be fueled by a more informed public and greater scrutiny of corporate environmental claims. Directors and officers may face increased scrutiny and potentially be held liable for making misleading environmental claims to investors, consumers, or regulators. False claims may expose organizations to lawsuits from shareholders, consumers, and regulatory bodies.
"Regarding anti-ESG sentiment, companies should be cautious but persistent in their climate initiatives. Even in an environment of political pushback, credible climate action, backed by solid reporting and third-party audits, will be essential for long-term corporate reputation and risk management.
"Finally, the potential return of a climate-skeptic administration under President Trump could derail federal climate policies, but it might spur more localized legal actions from states, cities, and activist groups, further driving the demand for climate-related lawsuits."