This edition of Relm’s Risk Wrap spotlights these developments, signaling a need for sharper scrutiny, smarter coverage, and proactive client guidance for brokers and underwriters alike.
AI Liability Gaps Widen as Federal Regulation Stalls
A bipartisan push for federal AI regulation has collapsed amid election-year gridlock, leaving tech firms navigating a patchwork of state-level rules. The absence of a unified framework is creating legal uncertainty, driving up compliance costs, and widening liability gaps for companies deploying AI at scale.
What this means for brokers and clients:
- Monitor clients operating across multiple jurisdictions for regulatory inconsistencies.
- Reassess D&O and E&O coverage to reflect increased exposure from AI-driven decisions.
- Prepare for heightened lobbying and potential regulatory shifts post-election.
Source: The Wall Street Journal, (July 9, 2025), After Setback, Tech Firms Renew Push for Federal AI Regulation.
Mega Constellations, Microbudgets: A Recipe for Orbital Risk Exposure
With over 7000 satellites already in low Earth orbit, and tens of thousands more planned, collision risk is skyrocketing. Starlink alone has seen a 200% increase in avoidance maneuvers. Meanwhile, proposed budget cuts threaten to dismantle the U.S. Traccs system, which coordinates orbital traffic. Adding to the complexity, Chinese mega-constellations are expected to launch over 26,000 satellites in the coming years, dramatically increasing congestion and the potential for in-orbit incidents.
Implications for brokers and clients
- Space insurers should prepare for increased claims tied to in-orbit collisions.
- Clients in aerospace and satellite services may need bespoke risk modeling.
- Budget-driven regulatory gaps could shift liability toward private operators.
Source: The Financial Times, (July 8, 2025), US Space Industry Sounds Alarm Over Budget Cut to Collision Alert System.
Qantas Hack Highlights Cracks in Third-Party Risk Coverage
A sophisticated voice phishing (vishing) attack on Qantas exploited a third-party customer service platform, bypassing multi-factor authentication (MFA) using AI-generated voice cloning. By mimicking trusted personnel, attackers were able to deceive internal systems and gain unauthorized access. The breach underscores the growing threat of social engineering, the evolving capabilities of AI-driven impersonation, and the vulnerabilities introduced by external vendors.
Implications for brokers and clients
- Review cyber policies for third-party and social engineering coverage.
- Encourage clients to audit vendor security protocols and MFA resilience.
- Expect underwriters to scrutinize voice-based authentication systems.
Source: Infosecurity Magazine, (July 7, 2025 ), Qantas Contacted by Potential Cybercriminal Following Data Breach.
Fast Food, Faster Breach: McDonald’s AI Leak Raises Privacy Alarms
An AI-powered hiring chatbot used by McDonald’s exposed the personal data of 64 million job applicants due to poor security controls. The leaked information included names, email addresses, and phone numbers, raising serious concerns about phishing, impersonation, and data misuse. The incident highlights the risks of outsourcing sensitive processes to AI vendors without robust oversight and continuous auditing.
Implications for brokers and clients
- Push for regular audits of AI vendors handling personal data.
- Ensure cyber policies cover data leaks from third-party platforms.
- Address reputational risk and regulatory exposure in privacy-sensitive sectors.
Source: WIRED (9 July 2025), McDonald’s AI Hiring Bot Exposed Millions of Applicants’ Data.
License at Risk: Revolut Faces Regulatory Deadline
Revolut is at risk of missing a key mobilization deadline tied to its UK banking license, a delay that could affect over 500,000 UK customers. The setback may prompt regulatory action, including license revocation or voluntary withdrawal. Compounding the issue, Revolut is still awaiting a separate consumer credit license, further extending its exposure to regulatory scrutiny and operational uncertainty.
Implications for brokers and clients
- Fintech clients may face increased scrutiny from regulators and insurers.
- D&O policies should be reviewed for coverage of regulatory enforcement actions.
- Delays in licensing can impact insurability and investor confidence.
Source: City A.M., (July 9, 2025), Exclusive: Doubts grow over Revolut banking license as fintech set to miss key deadline.
THC Testing Scandal Could Blaze Trail for Product Liability Claims
A new study reveals that some cannabis labs are deliberately inflating THC potency on product labels to boost sales. This misrepresentation introduces systemic risk, undermines quality standards, and erodes consumer trust. Overstated potency can lead to health issues such as anxiety, impaired coordination, and accidental overconsumption, opening the door to class-action lawsuits and regulatory crackdowns.
Implications for brokers and clients
- Reevaluate product liability coverage for cannabis producers and retailers.
- Flag lab testing practices as a potential underwriting red flag.
- Prepare for regulatory tightening and class-action exposure.
Source: Axios Denver. (July 7, 2025), Colorado weed labels may be overselling the high, study finds.
Want more market insights?
To get more insights into what’s informing emerging risk markets, check out Risk Wrap 008. Each issue unpacks high-impact developments across insurance, risk, and emerging exposures, helping brokers and clients stay a step ahead.
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