World Insurance in 2025: A Riskier, More Fragmented World Order

US Tariffs Threaten Global Economic and Insurance Sector Growth

New York, NY – Escalating US tariffs are poised to significantly dampen both global economic expansion and growth within the insurance industry, according to recent analyses from leading financial institutions. Swiss Re, a major reinsurance firm, has warned that the imposition of these trade barriers will curtail global premium growth to just 2% this year.

The ripple effects of the tariffs are expected to trigger a broader economic slowdown, particularly in the latter half of the year. CGS International forecasts a deceleration of global economic activity, directly attributing it to the impact of US trade policies. This downturn isn’t isolated; Seeking Alpha’s macro outlook for the third quarter of 2025 anticipates continued economic headwinds.

Insurance industry experts echo these concerns. Swiss Re’s assessment highlights that the tariffs will specifically impede the expansion of the global insurance market. The increased costs associated with tariffs are likely to translate into reduced investment and slower economic activity, ultimately impacting the demand for insurance products.

Evergreen Insights: The Interplay of Trade and Insurance

The connection between international trade and the insurance sector is frequently enough underestimated. Insurance plays a crucial role in facilitating global commerce by mitigating risks associated with cross-border transactions, political instability, and supply chain disruptions. When trade flows are restricted by tariffs, the need for trade credit insurance, political risk insurance, and cargo insurance can increase. However, a sustained period of trade conflict can ultimately diminish overall trade volumes, leading to reduced demand for these insurance products.

Furthermore, economic slowdowns generally correlate with decreased demand for life and health insurance as disposable incomes decline. Property and casualty insurance may also experience slower growth as businesses postpone expansion plans and reduce capital expenditures.

The current situation underscores the importance of diversification for insurance companies. Those with a strong presence in emerging markets or specialized lines of business may be better positioned to weather the storm. Monitoring geopolitical developments and adapting risk models to account for evolving trade policies will be critical for insurers navigating this challenging habitat. The long-term consequences of protectionist measures remain uncertain, but the immediate impact on global economic and insurance growth is becoming increasingly clear.

How might the increasing frequency of extreme weather events impact the long-term viability of private insurance markets in vulnerable regions like Florida?

Geopolitical Risk & Insurance Premiums

The global risk landscape in 2025 is markedly different than even a few years prior. Increased geopolitical instability, evidenced by ongoing conflicts and trade tensions, is directly impacting the insurance industry. Recent developments, like the tentative US-China tariff rollback reported in May 2025 by the World economic Forum, offer small glimmers of hope, but the overall trend points towards heightened uncertainty. This translates directly into rising insurance premiums, notably for political risk insurance, trade credit insurance, and supply chain insurance.

increased Demand: Businesses are actively seeking coverage for risks previously considered manageable,driving up demand.

Expanded Coverage: Policies are becoming more complex,needing to address a wider range of potential disruptions – from cyberattacks linked to state actors to resource nationalization.

Higher Capital Requirements: Insurers themselves face increased capital requirements to cover these expanded risks, further contributing to premium hikes.

The Rise of Non-Traditional Risks

Beyond geopolitics, 2025 sees a surge in non-traditional risks demanding insurance solutions. Climate change remains a dominant force, but its impacts are manifesting in increasingly unpredictable ways.

Climate Change & Insurability

Climate risk insurance is no longer a niche product. We’re seeing:

1. Increased Frequency of Extreme Weather: Hurricanes, floods, wildfires, and droughts are becoming more frequent and severe, straining the capacity of traditional property and casualty insurers.
2. Uninsurable Zones: Certain regions are becoming effectively uninsurable due to the escalating risk, leading to government intervention and the development of public-private partnerships. Florida,for exmaple,continues to grapple with the affordability and availability of homeowners insurance.
3. Transition Risk: Businesses face financial risks associated with the shift to a low-carbon economy.Liability insurance related to climate change litigation is a growing concern.

Cyber Risk Evolution

Cyber insurance continues to evolve rapidly. The threat landscape has shifted from opportunistic ransomware attacks to sophisticated, state-sponsored cyber espionage and attacks on critical infrastructure.

Ransomware-as-a-Service (raas): The proliferation of RaaS makes cyberattacks accessible to a wider range of actors, increasing the overall risk.

Supply Chain Vulnerabilities: Attacks targeting software supply chains, like the SolarWinds breach in 2020, demonstrate the systemic risk inherent in interconnected systems.

Data Privacy Regulations: Increasingly stringent data privacy regulations (GDPR, CCPA, etc.) amplify the financial consequences of data breaches, driving up the cost of cyber insurance.

Fragmentation of the Insurance Market

The global insurance market is becoming increasingly fragmented. Several factors contribute to this trend:

Regionalization of Risk: Risks are no longer globally homogenous. Specific regions face unique challenges – political instability in africa, climate vulnerability in Southeast asia, cyber threats concentrated in certain tech hubs.

Rise of Insurtech: Insurtech companies are disrupting traditional insurance models, offering specialized coverage and innovative risk assessment techniques. While beneficial, this creates a more fragmented landscape.

Reinsurance Challenges: Reinsurers, who provide insurance to insurance companies, are facing their own challenges – increased capital requirements, climate-related losses, and geopolitical uncertainty – leading to higher reinsurance rates and reduced capacity.

Parametric Insurance Growth: Parametric insurance, which pays out based on pre-defined triggers (e.g., rainfall levels, earthquake magnitude) rather than assessed damages, is gaining traction, particularly in emerging markets. This represents a shift away from traditional indemnity-based insurance.

Impact on Specific Insurance Lines

Here’s a breakdown of how key insurance lines are being affected:

| Insurance Line | key Trends in 2025 |

|—|—|

| Property & Casualty | Rising premiums, reduced coverage availability in high-risk areas, increased use of technology for risk assessment (AI, drones).|

| Life & Health | Increased focus on preventative care and wellness programs, rising healthcare costs, pandemic-related business interruption coverage. |

| Marine Insurance | Supply chain disruptions, piracy, climate-related risks (extreme weather impacting shipping routes). |

| Aviation Insurance | Geopolitical risks (conflict zones), cyber threats (targeting air traffic control systems), increased fuel costs. |

| Liability insurance | Climate change litigation, product liability claims, cyber liability.|

Benefits of Proactive Risk Management

In this riskier habitat, proactive risk management is crucial.

Reduced Insurance Costs: Demonstrating strong risk management practices can lead to lower insurance premiums.

Improved Business Resilience: Identifying and mitigating risks enhances a company’s ability to withstand disruptions.

* Enhanced Reputation: A commitment to risk management builds trust with stakeholders.

Practical Tips for Businesses

1. Conduct a Comprehensive Risk Assessment: Identify all potential risks facing your business, including geopolitical, climate, and cyber risks.
2. Diversify Your Supply Chain: Reduce reliance on single suppliers