AI Expansion and Rising Geopolitical Tensions Are Transforming the Insurance Landscape
According to the latest 'Sigma' report by the Swiss Re Institute, global insurance premiums are projected to grow by only 1.3% in real terms in 2026, significantly lower than the 3.9% growth recorded in 2025. Meanwhile, massive investment in AI infrastructure is creating new risks and demand for insurance.
Kathmandu. The rapid expansion of AI and rising geopolitical tensions are transforming the global insurance landscape. This is according to the latest 'Sigma' study report by the Swiss Re Institute. The report notes that amid growing pressures, the insurance industry is struggling to adapt to sluggish growth.
The report, titled 'World Insurance in 2026: Sink Absorbers in a Fragmenting World,' projects that global insurance premiums will grow by only 1.3% in real terms next year. This is significantly lower than the 3.9% growth recorded in 2025. The non-life insurance business is expected to perform even weaker, with real growth of only 0.6%.
This slowdown is attributed to recurrent supply shocks. According to Jerome Haegeli, Group Chief Economist at Swiss Re, the recent conflict in the Middle East is the fourth major disruption in the past six 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 projected to average 4% in 2026. This is about 1 percentage point higher than previous estimates. Additionally, overall GDP growth could fall to 2.5%. Given the growing risks related to inflation, government finances, and geopolitics, interest rates are expected to remain high for an extended period.
On the other hand, the rapid expansion of artificial intelligence (AI) infrastructure is also having a major positive impact. The Swiss Re Institute estimates that hyperscalers (large tech companies) will invest approximately $750 billion in AI-related capital expenditure in 2026. This investment is creating new demand for insurance coverage in areas such as property, engineering, cyber, liability, and business interruption.
The asset value of some large AI data centers exceeds $20 billion even before technology installation. This creates construction and property storage risks. These require more advanced risk solutions.
According to Ivan Gonzalez, CEO of Swiss Re Corporate Solutions, as supply chains become more fragmented, companies are seeking specialized protection to maintain business, investment, and continuity. He said, 'The growing use of AI is driving unprecedented investment in infrastructure. For this, insurance companies need to go beyond traditional products into a mix of risk engineering, alternative risk transfer, and financing solutions.'
Despite soft prices, non-life insurance companies are still expected to deliver strong returns. Swiss Re projects a return on equity of 11.4% in 2026. This is lower than last year's peak of 14%.
Good investment income is acting as a large buffer. In contrast, the life insurance sector is expected to see strong growth of 2.3%. This is supported by improved products and favorable conditions in emerging markets.
The overall message is that economies are experiencing fragmentation, and the importance of insurance has increased as technological change requires massive investment. 'By pricing these emerging risks, the insurance industry can help society recover from shocks and support real economic growth,' the report said. –Agency