IAIS warns AI and geopolitics raise insurer risk

But the overall conditions for the sector in 2026 were described as stable.

The International Association of Insurance Supervisors (IAIS) said global insurers remain financially strong, but rising investments in private credit, growing geopolitical fragmentation, and wider use of artificial intelligence are creating new risks that require closer regulatory attention.

In its 2025 Global Insurance Market Report, the IAIS said insurers continue to show solid solvency, liquidity, and profitability, with systemic risk at the global level slightly lower than last year and still well below that of the banking sector.

Non-life insurers recorded improved combined ratios in several regions, whilst life insurers benefited from stable investment income and better spreads. 

Overall conditions for the sector in 2026 were described as stable.

The report flagged the rapid growth of private credit in life insurers’ investment portfolios. 

Whilst overall exposure remains moderate, the IAIS said the asset class brings risks related to valuation, liquidity, borrower quality, and complex structures, prompting supervisors to step up monitoring and systemic risk analysis.

Geoeconomic fragmentation, driven by trade tensions, sanctions, and diverging monetary policies, is also affecting insurers’ asset values, currencies, and interest rates, making asset-liability management more complex for international groups. 

Supervisors are responding by strengthening stress testing and cross-border coordination.

The IAIS also pointed to the expanding use of artificial intelligence in underwriting, pricing, and claims. Whilst insurers report efficiency gains, regulators are concerned about model governance, data bias, cyber risk, and reliance on third-party providers, and are calling for stronger oversight frameworks.

On climate and catastrophe risks, the report said insurers’ exposure levels have remained broadly stable, but changes in natural catastrophe coverage and reinsurance protection continue to be monitored, alongside the use of climate scenario analysis.

Reinsurers, meanwhile, remained well capitalised in 2024, with stable underwriting results, growing premiums, and conservative investment strategies, despite past years of elevated natural catastrophe losses.