Which emerging issue will shape the P/C industry in 2023…and beyond

February 27, 2023 / 5 min read

While there’s never a dull moment in insurance (and don’t let anyone tell you otherwise), many of the emerging issues confronting P/C insurers in 2023 are particularly complex and challenging.

The 2023 Emerging Issues Bracket Challenge is our opportunity to see which issues have your attention this year. We’ve pitted 32 emerging risks in a tournament-style matchup, divided into four divisions—health, mobility, technology, and environmental/societal.

Before you fill in your bracket, let’s break down a key matchup in each of those divisions.

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The 2023 Emerging Issues Bracket Challenge is our opportunity to see which issues have your attention this year.

Health: PFAS vs. Lab-Grown Meat

PFAS “forever chemicals” made it to the semi-finals in last year’s challenge as federal regulators took action and lawsuits continued to mount.^[1] In 2022, the Environmental Protection Agency (EPA) issued drinking water health advisories for two particular PFAS chemicals in drinking water, setting acceptable levels to 0.004 and 0.02 parts per trillion, amounts so low they’re not generally detectable. However, there are thousands of chemicals in the PFAS family and they remain in wide circulation in numerous products, including nonstick pans, rainwear, and electronics^[2]^[3]

While the EPA is swinging into action against PFAS, the Food and Drug Administration (FDA) approved its first-ever lab-grown meat in November of 2022.^[4] The lab-grown meat, derived from cultured chicken cells, is expected to reach the public once the U.S. Department of Agriculture has inspected the producer’s facilities. PFAS may be a threat to our health, but the existence of lab-grown meat could change the way we eat. Projected to be a nearly $2 billion industry by 2035, lab-grown meat is viewed by some as a more humane and environmentally sustainable alternative to current animal agriculture (which is a major contributor of greenhouse gas emissions).^[5],[6] Lab-grown meat is making its Emerging Issues Bracket Challenge debut.

Technology: Metaverse vs. Robotics

The metaverse bowed out of last year’s Bracket Challenge in the first round—and things went downhill from there, as virtual reality headset sales dipped and virtual legs became a punchline^[7] But the rise of virtual worlds and the blending of real and virtual realities collectively called “the metaverse” is still projected to represent a $427 billion market by 2027.^[8]As the metaverse evolves, concerns surrounding cybersecurity and virtual property ownership inside (and outside) of it will likely grow legs.

While we may not be working inside a virtual world surrounded by avatars, we’re increasingly working alongside another new entrant to the Bracket Challenge: robots. Today, there are an estimated 451,000 industrial robots operating in the Americas.^[9]By one account, sales of industrial robots reached an all-time high in 2021, with overall market penetration doubling in just the past six years. As robots increasingly work alongside humans, will robot-induced injuries or accidents also rise? And will artificial intelligence (AI) empower robots to work with greater autonomy, adding additional complexity when evaluating robotic accidents? Or will that greater autonomy empower robots in ways that could ultimately harm humanity?

Environmental and Societal: Social Inflation vs. Economic Inflation

Loosely defined as rising insurance claims costs due to increased litigation and larger jury awards, social inflation can be a tricky phenomenon to pin down. However, some of the key drivers of social inflation may help us grasp the direction of the trend: According to one study, attorneys were involved in 55 percent of litigated auto claims and 54 percent of general liability claims at first notice of loss. Litigation funding is also seeing a cash infusion, to the tune of an estimated $2.3-$5 billion a year. Social inflation made it to the final round in the 2022 Emerging Issues Bracket Challenge—so it’s one to watch.

Unlike social inflation, economic inflation is a newbie to the bracket, after hitting rates last year not seen since the 1980s. While economic inflation showed signs of moderating at the close of 2022, it’s still running well above pre-pandemic levels.^[10] For insurers, this inflationary period is creating both short and longer-term pricing and reserving challenges and potentially heightening risk exposures across numerous lines of business.

Mobility: Electric Vehicles vs. Vehicle Hacking

We appear to be in a moment of profound automotive transformation as the sun slowly sets on the internal combustion engine and rises on the electric vehicle (EV). By 2050, the U.S. Energy Information Administration projects that 31 percent of the global light-duty vehicle fleet will be electric—up from just .7 percent in 2020.^[11]Alongside a surge of EVs on the roads is expected to be a buildout of EV charging stations across the United States, likely spurring new business activity to install and service these electron pumps.^[12] But are insurers pumped for EVs? Last year, they never made it out of the first round of the challenge.

Electronics and connectivity are increasingly intwined with modern vehicles irrespective of fuel source—and that means cyber risks are, too. According to the automotive cybersecurity and data analytics firm Upstream, cyberattacks targeting vehicles have surged 300 percent since 2018 and show no signs of slowing down. From manipulating vehicle sensors to malware lurking in electric charging stations, the cyber threats to today’s cars and trucks are varied—and evolving rapidly. Vehicle hacking returns to the challenge after bowing out in the second round of the 2022 contest.

Andrew Wallender, “Companies Face Billions in Damages as PFAS Lawsuits Flood Courts,” Bloomberg Law, May 23, 2022, < https://news.bloomberglaw.com/pfas-project/companies-face-billions-in-damages-as-pfas-lawsuits-flood-courts>, accessed on January 3, 2023.
“Navigation Panel to PFAS Structure Lists,” Environmental Protection Agency, August 2022, < https://comptox.epa.gov/dashboard/chemical-lists/PFASSTRUCT >, accessed on January 3, 2023.
Kyle Bagenstose, “What are PFAS? A guide to understanding chemicals behind nonstick pans, cancer fears,” USA Today, March 7, 2022, < https://www.usatoday.com/story/news/2022/03/07/pfas-guide-chemicals/6652847001/ >, accessed on January 3, 2023.
Katie Hunt, “Lab-grown meat is OK for human consumption, FDA says,” CNN, November 17, 2022, < https://www.cnn.com/2022/11/17/health/fda-lab-meat-cells-scn-wellness/index.html >, accessed on January 3, 2023.
“Sources of Greenhouse Gas Emissions,” Environmental Protection Agency, < https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions >, accessed on January 3, 2023.
“Lab-grown Meat Market by Type,” Meticulous Research, November 2022, < https://www.meticulousresearch.com/product/lab-grown-meat-market-5293 >, accessed on January 3, 2023.
Meera Navlahka, “Legs are coming to the Metaverse and everyone is...underwhelmed,” Mashable, October 12, 2022, < https://mashable.com/article/metaverse-legs-twitter-reactions >, accessed on January 3, 2023.
Jonathan Vanian, “Metaverse off to ominous start after VR headset sales shrank in 2022,” CNBC, December 28, 2022, < https://www.cnbc.com/2022/12/28/metaverse-off-to-ominous-start-after-vr-headset-sales-shrank-in-2022.html >, accessed on January 3, 2023.
“Executive Summary World Robotics 2022 Industrial Robots,” International Federation of Robotics, October 13, 2022, < https://ifr.org/ifr-press-releases/news/wr-report-all-time-high-with-half-a-million-robots-installed >, accessed on January 3, 2023.
“Consumer Price Index,” U.S. Bureau of Labor Statistics, December 13, 2022, < https://www.bls.gov/cpi/ >, accessed on January 3, 2023.
“EIA projects global conventional vehicle fleet will peak in 2038,” U.S. Energy Information Administration, October 26, 2021, < https://www.eia.gov/todayinenergy/detail.php?id=50096#:~:text=We%20project%20electric%20vehicles%20(EVs,2050%2C%20reaching%20672%20million%20vehicles) >, accessed on January 3, 2023.
“The Biden-⁠Harris Electric Vehicle Charging Action Plan,” The White House, December 13, 2021, < https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/13/fact-sheet-the-biden-harris-electric-vehicle-charging-action-plan/ >, accessed on January 3, 2023.