Credit, political risk insurance softens as underwriter shortage drives up costs

New entrants face rising hiring bills and heavier expense ratios in 2026.

The credit and political risk insurance (CPRI) market achieved strong growth and high profitability throughout 2025, Howden Re said.

This performance was driven by a balance of elevated demand from banks and corporations alongside disciplined underwriting. 

Despite global geopolitical volatility, the sector significantly outperformed broader commercial lines. 

In the first half of 2025, the US credit and surety market grew by 10%, whilst its incurred loss ratio remained low at 26%, compared to a 57% loss ratio for major commercial lines.

Looking ahead to 2026, the market is expected to undergo a gradual and selective softening. Increased capacity from new entrants and incumbents has led to pricing declines of 10 to 20 points from post-pandemic highs for standardised risks. 

During the January 1, 2026 renewals, reinsurance ceding commissions for quota-share business saw moderate increases, whilst excess-of-loss programs remained stable. 

Demand is projected to stay robust as US banks and investment funds increasingly utilise CPRI for capital relief and risk mitigation.

A primary challenge for the coming year is a critical shortage of experienced underwriting talent. 

Competition for specialists is driving up hiring costs and expense ratios, particularly for new market entrants. 

Howden Re notes that established firms with deep expertise are best positioned to manage this talent gap. 

Without a major loss event, the market is expected to remain stable, though the scarcity of skilled professionals may act as a natural limit on further margin erosion as capacity increases.