Rising geopolitical tensions, inflation, and cyber threats are creating challenges for insurers, even as the global insurance sector remains financially resilient, according to the International Association of Insurance Supervisors’ (IAIS) 2026 mid-year Global Insurance Market Report (GIMAR). The report emphasizes how these growing risks can lead to increased claims costs from inflation, disruptions to maritime routes and energy markets, and challenges involving war and cyberattacks.
The report found that insurers’ solvency, liquidity, and profitability remained relatively stable in 2025; however, it identified macro-financial and geopolitical risks that could impact both claims and underwriting.
Transmission Channels of Geopolitical Risk in Non-Life Insurance
Geopolitical conflicts are disrupting energy markets, driving inflation, and amplifying underwriting risks. According to the International Monetary Fund (IMF), “escalating geopolitical tensions and disruptions to energy supply chains have increased the risk of renewed energy price volatility, which could feed through to inflation and raise claims costs across non-life insurance lines such as motor, property, and business interruption,” states the report. Lines such as liability and workers’ compensation are especially vulnerable, the report emphasizes, as inflation risks deplete reserves and weaken profitability and solvency.
Further, disruptions to maritime shipping and aviation are heightening risks for marine and aviation insurers, with claims related to war risk, cargo losses, rerouting costs, and rising jet fuel prices.
Cyber risks, driven by geopolitical tensions and advancements in artificial intelligence (AI), are generating correlated losses across multiple business lines such as cyber, property, and liability insurance. Meanwhile, the report continues, “modern conflicts involving cyber operations, sanctions, and proxy attacks are complicating the enforcement of war exclusions and coverage for indirect losses.”
Impact of Advancements in AI and Technology on Cyber Resilience
Cyber risks continue to evolve as attacks increase in frequency and become more sophisticated. Effective operational resilience in response to these threats is vital. This, the report states, includes having “robust cyber hygiene, effective patching of information and communication technology (ICT) vulnerabilities and possibly the use of defensive AI capabilities.”
Impact of Macroeconomic Risks
Macroeconomic shifts directly affect investment portfolios, solvency ratios, and overall balance sheet resilience—particularly for life insurers “given their exposure to long-duration liabilities and the sensitivity of their asset-liability positions to shifts in the interest rate environment.”
Rising interest rates and widening credit spreads can place downward pressure on the market value of fixed-income portfolios, according to the report. “Insurers could also encounter heightened liquidity risks due to higher collateral and margin calls on derivative hedging [programs], increased policyholder surrender activity, and declining liquidity in private asset and corporate bond markets during periods of volatility.”
Furthermore, the report notes that the Financial Stability Board estimates total global private credit assets at approximately $2.0 trillion at the end of 2024. As a result, insurers, “as major institutional investors in private credit markets, face growing risks from valuation uncertainty, concentration risk and potential losses under stressed conditions, highlighting the importance of asset diversification and sound asset-liability matching.”
Other Risks
The report also mentions AI underwriting and digital assets, noting that, as “legal frameworks relating to AI continue to develop, there are implications for insurers underwriting commercial liability risks,” with more insight to come in the year-end GIMAR.
Climate-related risks were also analyzed as they manifest physically in two ways: through the increasing frequency and severity of extreme weather events, which have led to rising claims and pressures on insurers; and chronic physical risk drivers, such as sea level rise, drought, and heat stress, which may also cause material direct or indirect impacts on insurers over time.
“Many jurisdictions continue to [characterize] the near-term impact of climate-related risks on insurers as manageable,” states the report. “However, this often coexists with notable gaps in data availability, challenges in risk quantification and limitations in supervisory frameworks. The depth and quality of responses also vary significantly across jurisdictions.” Overcoming climate-related challenges will require enhanced data quality, improved modeling, and strong supervisory frameworks, advises the report.
About the Author:
Angela Sabarese is an associate editor at CLM. angela.sabarese@theclm.org