The Product Regulation and Metrology Act 2025: How it could help insurance for emerging risks

Scope of the Act

The Act establishes a broad and flexible framework for regulating products in the UK. It enables regulation for several key purposes:

• Reducing or mitigating risks presented by products
• Ensuring that products operate efficiently or effectively
• Ensuring that products designed for weighing or measuring operate accurately
• Reducing or mitigating the environmental impact of products (where provisions correspond with or are like EU law)

Importantly, the Act allows for regulations that place responsibilities on all participants in the supply chain, including manufacturers, importers, distributors, installers, certification bodies, and online marketplaces. This comprehensive scope promotes responsibility for product safety and performance from production to point-of-sale and beyond.

The Act covers a wide range of tangible consumer goods, such as toys, cosmetics, and industrial equipment, while also including powers to regulate intangible components of products—such as software.

The Act also allows for selective alignment with EU product safety laws, offering flexibility to harmonise where beneficial while retaining the ability to diverge.

For more information on the content of the Act, see our article UK product regulatory & liability reform on the horizon: what businesses need to know.

Addressing emerging risks

A central aim of the Act is risk mitigation, particularly in response to emerging safety concerns and product ineffectiveness. By granting the Secretary of State broad authority to introduce specific regulations via secondary legislation, the Act allows for an agile and responsive process to address risks posed by emerging products and technologies.

The framework established by the Act may facilitate regulation of a range of emerging risks, including:

E-Mobility

In a press release about the Act by the Department for Business and Trade (DBT), the e-mobility sector—including e-scooters and e-bikes—is identified as a regulatory priority.

E-vehicles are powered by lithium-ion batteries, which contain a flammable electrolyte and are therefore prone to fire and explosion risks. The Office for Product Safety and Standards in 2024 received reports on 211 fires involving e-bikes or e-scooters in 2024, amounting to a fire every 1.7 days. Many of these fires were caused by unsafe lithium-ion batteries purchased through online marketplaces. The figures underscore the urgent need for stronger oversight and accountability in both the e-mobility and digital retail sectors.

Insurers have voiced concerns about the fire risks of lithium-ion batteries and are calling for improvements in safety. As a result, they are imposing stricter underwriting conditions:

• Home insurance policies may include exclusions or limitations for damage caused by battery fires, particularly if the product was not certified or installed correctly, and premiums may increase for households storing or charging e-mobility devices indoors, especially in multi-occupancy buildings.
• For businesses handling lithium-ion batteries, insurers are increasingly imposing strict underwriting conditions, including higher premiums, coverage exclusions and requirements to evidence fire mitigation systems, safety training for staff, third party testing and certification.

Once regulations addressing lithium-ion batteries are introduced under the Act, this may reduce frequency of incidents and improve product traceability making it easier for insurers to assess risk, consequently supporting more favourable underwriting for both individuals and businesses.

Technology including AI

The rapid growth of AI-enabled devices, software-as-a-service (SaaS) platforms, and other technologies is reshaping the product risk landscape. These innovations offer significant benefits but also introduce complex and evolving risks that challenge traditional regulatory and insurance frameworks.

Emerging technologies—particularly those involving artificial intelligence—carry risks that are difficult to model and anticipate. These include coding errors, biased datasets, faulty algorithms, and autonomous decision-making, and these risks can evolve over time as systems learn and adapt. For insurers, such unpredictability often leads to tighter underwriting practices or exclusions to mitigate exposure which may result in unfavourable terms for policyholders.

However, the Act is placed to address these technologies, by explicitly including intangible components—such as software and algorithms—within its scope. It also introduces a lifecycle approach meaning regulatory obligations introduced by the Secretary of State may extend beyond the point of sale to cover updates, integrations, and interactions throughout a product’s use.

For insurance, these developments are welcome. Regulation introduces guardrails that make emerging risks more predictable—through mandatory disclosures, operational safety standards, and clearer liability attribution. The lifecycle approach incentivises manufacturers to maintain safety standards over time, reducing the likelihood of negligence and claims. If the Secretary of State exercises the powers introduced under the Act to address such emerging technologies, insurers may be better equipped to assess risk, price policies accurately, define exclusions, and offer tailored coverage solutions that reflect the true nature of the risk. For policyholders, this may mean better insurability, reduced premiums and higher coverage limits. However, whether—and to what extent—these benefits materialise will depend on whether secondary legislation is introduced targeting these technologies, and on the scope and substance of any such regulation.

In summary, insurers may look to limit their potential exposure to new or developing risks which can result in unfavourable terms or coverage gaps for policyholders. Regulatory oversight—particularly in fast-evolving areas like AI software, and e-mobility—helps reduce uncertainty, promote transparency, and encourage best practices among actors in relevant supply chains. This, in turn, enables insurers to more accurately price policies, define exclusions, and develop tailored coverage solutions that reflect the true nature of the risk.

Key takeaways for policyholders

The Act introduces a streamlined mechanism in which regulations can be introduced for specific products. If such regulations are introduced that affect your business, it may result in the following:

• Improved Insurance Coverage

Targeted regulation of high-risk products may lead to safer and more effective practices. This may reduce the likelihood of incidents and claims, potentially resulting in more favourable insurance terms, broader coverage, and lower premium

• Heightened Liability Exposure

Businesses may face increased regulatory scrutiny and enforcement. Failure to meet these standards could lead to enforcement action and claims under product liability policies. Policyholders should be aware of how these developments may affect their coverage and risk profile.

• Cross-Border Coverage Complexity

Where UK regulations align with EU standards, policyholders operating across jurisdictions may benefit from clearer and more consistent insurance arrangements. However, divergence from EU rules could introduce complexity—particularly around liability thresholds, compliance expectations, and policy wording—making it important to review cross-border coverage carefully.

• Need for Proactive Compliance and Risk Strategy

With much of the detail of any regulations to be defined through secondary legislation, policyholders should engage early with legal and insurance advisers. Proactive planning can help avoid coverage gaps, ensure compliance, and support better negotiation of insurance terms.

How we can help

We can help corporate policyholders by reviewing their insurance cover, advising on coverage, assisting on claims notifications and acting in situations where insurance claims are denied by insurers.

Please visit our dedicated insurance hub InCrowd where you will find a collection of ‘Insurance Essentials’ short videos explaining how insurance can help your business thrive, covering topics such as political risk insurance, embedded insurance, and insurance for directors and information about how we can help you with your insurance issues.

Authored by Lydia Savill and Erin Davies.