Risk Management » 2023 Insurance Issues Include False Advertising Suits, Higher Premiums

2023 Insurance Issues Include False Advertising Suits, Higher Premiums


February 9, 2023

The 2023 Commercial Litigation Outlook recently released by law firm Seyfarth predicts that the property and casualty insurance market will continue to experience extreme volatility driven by losses due to catastrophes, supply chain disruption, and “social inflation (i.e., legislative and litigation developments that affect insurers’ legal liabilities and claims costs).” Nevertheless, professional liability premiums in areas other than architecture and engineering, and D&O premiums, will rise at a moderating pace. About the same percentage of claims under Representations and Warranties Insurance as last year are predicted because 2021 was a big year for deals, and RWI claims tend to mature one to three years after transactions close. It also notes that RWI policies routinely contain mandatory arbitration provisions, which renders disputes and their resolution confidential. “As a consequence, the common law arguably is underdeveloped regarding some of the policy terms.” Last year marked an increasing number of false advertising lawsuits, often alleging that products were not sufficiently “natural,” or did not contain enough of a particular ingredient. Coverage for such suits is probably not available under general liability policies because allegedly false representations are not included within the enumerated offenses of the advertising injury coverage part. Coverage under the “wrongful act” portion of D&O policies may exist.

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