From the modernisation of Lloyd's to Brexit, we offer our international experts' predictions on the opportunities and challenges that regulatory and advisory teams may face in the coming year and beyond.

1. Modernisation of Lloyd's and London Market will gather pace

The publication by Lloyd's of Blueprint One following the unveiling of the Future at Lloyd's prospectus in May 2019 underlines the determination of the London insurance market to modernise and to cut the costs of doing business in London. The Blueprint sets out six improved ways of working, underpinned by a heightened focus on digital, data and technology to deliver greater benefits to customers. Phase 1 will be delivered during 2020 and will include early quick wins, including the launch of an electronic risk exchange which could, over time, process as much as 40% of Lloyd's risks. In addition, Lloyd's will pilot a solution that automatically triages claims to speed up settlement and introduce simplified onboarding for Lloyd's coverholders. With electronic placement of business already gathering pace, structure and methodologies of the market will continue to change with brokers in particular having to review their business models.

2. The Prudential Regulation Authority's regulatory focus on climate change will gain greater prominence in 2020

Recognising the importance of managing the financial risks from climate change, the Prudential Regulation Authority (PRA) has consulted banks and insurers on climate-related challenges and its detailed expectations on effective governance and risk management will follow. It has established the Climate Financial Risk Forum to develop analytical tools and techniques to inform strategy and regulatory approach. Recent natural catastrophes have highlighted the need for firms to review whether their modelling accurately represents the changing nature, frequency and severity of climate perils and exposure trends. The PRA will shortly undertake sample reviews to stress test the adequacy of firms' exposure management, their risk mitigation strategies and to ensure firms are meeting their climate responsibilities.

3. Brexit: the UK's departure from the EU will mark only the beginning of protracted uncertainty

Serious negotiations about the UK's future trading relationship with the EU will only properly begin once the UK ceases to be an EU member on 31 January 2020. This phase will need to address a long list of issues impacting the insurance industry such as the current absence of equivalence regimes under legislation such as the Insurance Distribution Directive; the effect on personal lines insurance such as travel, health and long term insurance and pensions; and how information which is fundamental to international financial stability and consumer protection should continue to be shared between national regulators. With the UK Government adamant that this phase has to be completed by the end of December 2020 (and in practice much earlier if member states are to have time to ratify the new agreement), it is unlikely that all these issues will be addressed. To help ease some of the business uncertainty and confusion, the Prudential Regulation Authority and the Financial Conduct Authority have implemented a Temporary Permissions Regime to allow EU financial services firms to continue to enter into new business and renew existing business for up to three years after passporting rights fall away. They have also introduced a run-off option and a standstill proposal to give firms time to adjust to the UK's post-Brexit regime. But these measures are only just the beginning of what is needed to see businesses properly transition into a postBrexit world.

4. Political uncertainty will continue and insurers will need to keep close to events, especially Gibraltar

Commercial war between US and China, Brexit, secessionist tensions in Spain and potentially in other European countries will continue to unsettle markets and business relationships. In particular, any post-Brexit trade negotiations could throw up some unexpected surprises. One of those could be the future of Gibraltar. The EU has told Spain it will have a veto over applying the future EU-wide trade deals to Gibraltar. This will give Spain some crucial leverage to tackle their long-running grievances over smuggling and tax evasion. With the amount of UK insurance especially motor now written in Gibraltar this is an issue that will need careful monitoring. In addition, political uncertainty threatens business continuity. This presents an opportunity to think about potential disruption to supply chains. In this difficult global landscape, what could risk managers do to keep doing `business as usual'? The current market situation is likely to require a significant change in insurance products and the redesign of longestablished business models.

5. Scottish Nationalists renew calls for independence vote

The Scottish First Minister and leader of the Scottish National Party, Nicola Sturgeon, has signalled her determination to hold a second referendum on independence in 2020. A referendum on Scottish independence requires a transfer of power from Westminster through a section 30 order. This has so far been ruled out by the UK Government and the large Conservative majority now makes that look unlikely to happen in this Parliament. If a vote does take place, many expect the result to be closer than the previous rejection of independence by 55% to 45% in September 2014, although it is worth noting that the SNP share of the vote in the December 2019 general election was 45%, suggesting support for independence has not moved much. Any prospect of a pro-independence vote will prompt many firms, including financial institutions, to review their domicile. In 2014, many firms optioned office space in London as a contingency and we are likely to see that happen again should there be a second independence referendum. There will also be assessments of the risks around plans for a Scottish currency, central banking arrangements and taxation.

6. An Australian Perspective: Regulators will continue to take on digital platforms over privacy concerns and class actions will follow

At the end of October 2019, the Australian Competition and Consumer Commission (ACCC) announced it is suing Google over misleading consumers about its collection and use of personal location data. This action was widely expected following the publication of the ACCC's Digital Platforms Inquiry Final Report earlier in the year. This is the ACCC's first case against a major digital platform. The Australian consumer watchdog's action reflects similar approaches taken by regulators in other countries, including Germany and the United States. There's no doubt government regulators worldwide will continue to champion consumers and uphold local privacy laws, with further investigations and antitrust reviews into companies like Apple, Amazon and Facebook already announced. As night follows day, class actions will leverage the regulators' efforts.