Kathmandu. Insurance companies around the world are financially stable. However, geopolitical tensions, economic pressures, and cyber risks are becoming major concerns for the insurance sector.
Preliminary results from the International Association of Insurance Supervisors’ (IAIS) 2026 Global Monitoring Exercise indicate that the stability and profitability of insurance companies are stable at the end of 2025. This is supported by operating performance, asset liability management, and strong capital buffers.
However, the IAIS noted that insurance companies are facing challenges such as increased investment in less liquid assets, share recovery, debt repayments, dividend payments and market volatility. The overall systemic risk score for global insurance groups also increased slightly at the end of 2025 compared to a year earlier. This increase is mainly due to asset sales to raise additional cash and increased interrelationships between insurance companies, financial markets and the broader economy.
In its 2026 monitoring exercise, IAIS identified the impact of macroeconomic risk on the balance sheets of three sector life insurance companies, how geopolitical risks are transmitted through non-life insurance, and the impact of artificial intelligence (AI) and other technologies on the cyber resilience of insurance companies.
For life insurance companies, changes in interest rates, credit spreads, and inflation can put pressure on solvency, liquidity, and profitability. This is because they have long-term obligations. Insurance companies are addressing this through measures such as asset redistribution, scenario analysis, and liquidity stress testing.
Geopolitical conflicts over non-life insurance can disrupt energy markets, increase claims costs, and increase underwriting risk. “Insurance companies are strengthening capital and liquidity buffers to manage these risks,” the IAIS said. Cyber risks are also becoming more complex as insurance companies and other businesses adopt new AI models. ’
The IAIS is examining how advances in AI and technology can affect the operational resilience of insurance companies. The IAIS’s 2026 monitoring exercise includes 56 large international insurance groups in 18 regions. It also includes aggregate market data representing more than 90 percent of the global total premiums.
IAIS’s full-year global insurance market report will be out in December. – Agency
