Kathmandu. The rapid expansion of AI and rising geopolitical tensions are changing the landscape of the global insurance sector.
This is what the latest Sigma study report by the Swiss Re Institute shows. The report says that the insurance industry is struggling to adapt to slower growth amid increasing pressure.
The report, titled ‘World Insurance in 2026: Shock Absorbers in Now Fragmenting the World’, predicts that global insurance premiums will rise by only 1.3 per cent in real terms next year. This is significantly lower than the 3.9 per cent growth recorded in 2025. The non-life insurance business is projected to perform even weaker, with real growth of just 0.6 per cent.
This slowdown is caused by recurrent supply shocks. According to Jerome Hagelly, chief economist of the Swiss Rica Group, the recent conflict in the Middle East is the fourth major disruption in the last 6 years. “These events are no longer isolated incidents but have become a permanent part of the global economy,” he said.
As a result, global inflation is expected to average 4 percent in 2026. This is about 1 percentage point higher than previously estimated. In addition, overall GDP growth may fall to 2.5 percent. Interest rates are expected to remain high for a long time, taking into account the rising risks associated with inflation, government finances, and geopolitics.
On the other hand, the rapid expansion of artificial intelligence (AI) infrastructure is also having a huge positive impact. The Swiss Re Institute estimates that hyperscalers (large tech companies) will invest about $750 billion in capital expenditures related to AI in 2026. This investment is creating new demand for insurance coverage in areas such as property, engineering, cyber, liability, and business disruption.
The asset value of some large AI data centers exceeds $20 billion even before the technology is established. This creates construction and asset storage risks. That requires more advanced risk solutions.
According to Ivan Gonzalez, CEO of Swiss Re Corporate Solutions, companies are looking for special protections to maintain business, investment, and continuity as supply chains become more fragmented. “The increasing use of AI is driving unprecedented investment in infrastructure. This requires insurance companies to move beyond traditional products into a mix of risk engineering, alternative risk transfer and financing solutions.” ’
Despite the softer prices, non-life insurance companies are still projected to deliver strong returns. Swiss Reilly forecasts an equity return of 11.4 percent in 2026. This is lower than last year’s peak of 14 percent.
Good investment income is acting as a big buffer. In contrast, the life insurance sector is expected to see a strong growth of 2.3 per cent. This is supported by improved yields and favourable conditions in emerging markets.
The overall message is that economies are experiencing fragmentation and that technological change has increased the importance of insurance when it requires large investments. “By pricing these emerging risks, the insurance industry can help society recover from shocks and support real economic growth,” the report said. — Agency
