LMA Looks Ahead to Busy 2026, Identifies Key Goals

Here are some insights from Arabella Ramage, Legal and Regulatory Director at the Lloyd’s Market Association (LMA)

There are four areas in the legal and regulatory arena where we at the LMA will be concentrating our efforts in 2026.

First, it was refreshing and we were delighted to see that insurance and reinsurance were identified as having the potential to be key drivers of growth for the UK Government, as announced in its ‘Growth Strategy’ in July last year. This was long overdue recognition of the fact that the London insurance market forms a key part of the London and UK economy. 60,000 people are employed in the sector.

We also supported the announcements made by the government on specialty insurance, such as the new captives regime, as well as other initiatives to reduce red tape and attract new participants to London to help boost the competitiveness of the market.

As we head into 2026, we are concerned to ensure that this focus is not short-lived and that specialty insurance remains a priority for the regulators. For instance, insurance was merely a footnote in the FCA’s letter to the Prime Minister at the end of the year. 

This was also highlighted in the FCA’s announcement on simplifying insurance rules in December. We believe this was a missed opportunity. For three years, the LMA has worked closely with the FCA on the critical issue of reducing unnecessary FCA regulation in areas of insurance where such regulation is disproportionate to its benefit. We have focused on the territorial scope of the FCA rulebook and the definition of ‘consumer’. Both have significant implications for the Lloyd’s marketplace and remain unresolved. The FCA only went halfway towards a handbook definition of consumer and pushed out consideration of the territorial scope of its granular regulation to 2026.

Progress is too slow. If the FCA has the courage to address these points this year, it will materially reduce unnecessary regulatory burdens while still ensuring retail customers receive appropriate protection. We urge the FCA to deliver these substantive reforms within the next 12 months and to honour its original promises to the LMA.

The consensus is that we are entering a softening UK and global insurance market after a period of significant hardening between 2019 and 2023. Precedent has shown that a softening market can often lead to a relaxation of important protections for insurers in policy wordings and fewer exclusions, as insurers ramp up competition for market share and growth.

While this can be more favourable for insureds, it can mean less rigorous scrutiny of wordings and risk profiles during the underwriting process, and potential ambiguities in coverage in the future leading to disputes. This is an area where we will be keeping a close eye on market developments.

One specific wordings area which the LMA will be working on in 2026 is war clauses, particularly the Five Powers War Clause, which emerged from the post-1945 consensus. This may need updating to reflect the changing nature of geopolitical conflicts. New technologies (such as cyber warfare which is distinct from traditional kinetic warfare) were not a consideration when many of these clauses were developed and there is a need to ensure greater clarity as to when and how the clauses are triggered in warlike circumstances. This contract certainty is important to insureds and insurers.

Another continued area of focus this year is cyber. We are following initiatives such as the proposed UK government ban on ransomware payments for all public sector bodies and operators of critical national infrastructure, including hospitals and local councils.

We were supportive of considering imposing new obligations on the private sector, such as a legal requirement to notify the government before making a ransom payment, to try to start obtaining more accurate data as to the extent of the issue.

There is general worldwide concern within governments and regulators as to the slow uptake in cyber insurance, particularly among small and medium-sized enterprises (SMEs), and about an underdeveloped cyber insurance market at a time when the risk to those sectors is growing ever more significant. Recent high-profile events in the UK have highlighted the need for the whole supply chain to be prepared for cyber interruption. Too often, cyber insurance is not seen as a priority until too late and SMEs do not appreciate the impact that an attack on a major manufacturer or employer in their area can have on their business, even if the SME is not the subject of the attack.

We will be focusing on looking at products to assist insurers and brokers to help these under-insured areas and promote the widespread uptake of cyber insurance globally, and foster innovation in the market.

Finally, persistent natural catastrophe insurance gaps across jurisdictions will continue to dominate debate in 2026.

For many parts of the world, national catastrophe remains the burning platform issue for insurance. As one report noted this month, lawsuits arising from climate-related disasters in the US have more than doubled over the past decade as extreme weather damage increases.

One year on from the California wildfires that brought the protection gap into sharp relief, the availability of coverage in certain jurisdictions remains a real challenge, leaving individuals and businesses vulnerable and increasing the burden on governments for any post-disaster relief.

At the LMA, we support any discussions that can bring innovative solutions to the problem, including government-backed insurance schemes and collaborative models involving both the public and private sectors, to make coverage more accessible and sustainable. This could include regulatory changes to encourage risk mitigation, improving building standards and potentially mandating certain levels of insurance coverage to build greater financial resilience.

The natural catastrophe challenge is only going to intensify globally. The insurance industry and Lloyd’s in particular have a vital role to play in managing and transferring climate-related financial risks.