Civilian Tech, Military Use is an Emerging Liability Minefield
Tech-sector startups entering the defense industry bring agile methods and lean pricing that challenge established norms and the traditionally regulation-heavy procurement processes. Their fast-paced development cycles raise oversight and safety concerns typically managed through longer military R&D timelines.
The emergence of dual-use technologies, such as AI-powered boats and drones, introduces significant security and ethical risks, particularly regarding export controls. As the line between civilian and military technology increasingly blurs, there is growing scrutiny over how and where these innovations are deployed. Meanwhile, traditional defense primes face integration challenges as rapid, venture capital-backed entrants reshape the pace and structure of the sector.
Implications for brokers and clients
- Clients working on dual-use or export-sensitive tech may need custom liability frameworks.
- Insurance coverage should consider IP risk, field testing liabilities, and government contract compliance.
- D&O and cyber exclusions tied to military use cases or regulatory breaches may require review.
Source: Financial Times. (July 29, 2025). Ex-Apple engineer brings Silicon Valley tactics to European defence tech.
AI-Powered Investment Bank Sparks New Liability Questions
AI is disrupting professional services by replacing staff involved in traditional deal-making processes, which sparks new evaluation risks. Reliance on experimental AI systems can lead to challenges with data quality and CRM integration. As traditional due diligence is reduced, transaction risks for stakeholders increase. Additionally, automated workflows raise concerns about transparency and oversight, particularly in complex transactions.
Implications for brokers and clients
- E&O cover should reflect the risk of AI-led decisions without human oversight.
- Policies must account for errors caused by data quality, model assumptions, or system integration failures.
- Financial clients using AI should document governance procedures and review coverage for transaction-related risk.
Source: Financial Times. (July 30, 2025) The AI Banker Who’s Ripping Up the Wall Street Rulebook.
Online Gambling Tax Shake-Up Signals Rising Regulatory Risk Exposure
The UK government is under increasing pressure to tax the £15 billion gambling sector as a means of addressing a £20 billion fiscal gap. A proposal from HMRC suggests consolidating three existing duties into a single Remote Betting & Gaming Duty (RBGD), which could see betting operators taxed at the same rate as higher-margin casino games. While policy debates often justify potential tax increases by referencing gambling-related social harms, there is currently no formalized statutory metric to measure such harm.
Implications for brokers and clients
- Clients in the betting sector should review financial lines cover for regulatory risk and retrospective penalties.
- Expect higher scrutiny from underwriters on compliance systems and tax obligations.
- Business interruption policies may need to address tax-driven operational restructuring or margin compression.
Source: Financial Times. (July 30, 2025). Rachel Reeves faces calls to increase taxes on £15bn gambling industry.
Licensing Malfunction Exposes Cannabis Dispensaries to Risk
A total of 152 dispensaries have been flagged by the Office of Cannabis Management (OCM) for violating the 500-foot buffer rule, after using entrance-based rather than property-line measurements. These violations put license renewals at risk unless the Legislature amends the law, or the affected businesses relocate to compliant locations. Although a state-created fund offers up to $250,000 per business to support relocation, the financial relief is expected to fall short of actual costs. Operators face rising credit and financial exposure, with the threat of bankruptcy or lease defaults mounting, amid ongoing regulatory uncertainty.
Implications for brokers and clients
- Commercial property and business interruption policies should account for forced relocations or lease disputes.
- Credit risk coverage and D&O policies may be increasingly relevant amid regulatory uncertainty.
- Clients should document all communications and mitigation efforts for future claims defense.
Source: New York Post. (July 28, 2025). NYS cannabis office mess-up could force 152 pot shops to close — or relocate.
Psychedelic Approval Push Tests the Limits of Safety and Evidence
Fast-tracked FDA drug approvals are raising concerns about whether standard safety and testing practices are being adequately upheld. Notably, scientific advisors had previously rejected MDMA trials for PTSD, citing flawed data and a lack of methodological rigor in earlier applications. Researchers and ethicists have also pointed to the unique challenges of studying psychedelics, where altered mental states make double-blind trials nearly impossible. Accelerated approvals risk bypassing critical safeguards, increasing the potential for adverse effects and subsequent product liability lawsuits.
Implications for brokers and clients
- Product liability policies must address gaps in clinical testing and post-approval safety oversight.
- Mental health and biotech clients need rigorous documentation to support claims defensibility.
- Expect underwriters to reassess appetite for fast-tracked pharmaceuticals and emerging therapies.
Source: The Philadelphia Inquirer. (July 16, 2025). FDA leaders push to approve psychedelics. Critics say science isn’t ready.
EU Space Act Sets New Compliance and Liability Benchmarks
The EU is proposing stringent new regulations for satellite operations, significantly increasing compliance and liability risks for operators. All third-party providers will be required to meet mandatory standards for cybersecurity, resilience, and space debris mitigation. In addition, new rules will mandate environmental impact assessments and reporting, further shaping satellite design and operational planning. Non-compliance could result in severe consequences, including regulatory penalties, breaches of contract, or the invalidation of insurance claims.
Implications for brokers and clients
- Satellite clients should review policies for alignment with forthcoming regulatory standards.
- New operational risks (e.g., collision, data breach, debris) must be addressed in underwriting.
- Insurers may tighten coverage terms around environmental and third-party liability in orbit.
Source: JD Supra. (July 24, 2025). The Proposed EU Space Act: 10 Key Takeaways
