AI and Geopolitics Reshape the Insurance Industry Landscape

The global insurance industry is entering a new chapter. After several years of facing a pandemic, inflation, rising interest rates, and natural disasters, the world is now confronting two major forces that will shape the industry’s direction in the coming decade: geopolitical fragmentation and an explosion in artificial intelligence (AI) investment. In its latest report, ‘World Insurance in 2026: Shock Absorbers in a Fragmenting World’, the Swiss Re Institute predicts that while global insurance premium growth will slow in 2026, significant new business opportunities will emerge from AI infrastructure investments worth approximately US$750 billion. According to the Swiss Re Institute, the insurance industry is no longer merely functioning as a claims payer but is becoming a shock absorber for the global economy—absorbing risk, safeguarding investment continuity, and accelerating economic recovery amid rising global uncertainty. Jérôme Haegeli, Swiss Re Group Chief Economist, said the latest conflict in the Middle East is not a temporary shock but another sign that geopolitical risk has become a structural feature of the global economy, with four supply shocks in six years. ‘As the global economy invests in artificial intelligence (AI) infrastructure, energy systems, and more resilient supply chains, entirely new sources of risk are emerging,’ he said. He noted that insurance has a vital role—not only in mitigating the risks of these investments but also in facilitating genuine economic transformation and pricing risk.

Swiss Re Institute assesses that geopolitical conflict is no longer temporary but has transformed into a structural risk that will shape the global economy in the long term. The Middle East conflict in 2026 represents the fourth supply shock in the last six years, following the Covid-19 pandemic, the Russia-Ukraine war, and global trade tariff wars. This series of events has increased logistics costs, prolonged supply chain disruptions, fuelled inflation, and forced companies to build more resilient production systems. Under these conditions, Swiss Re expects global economic growth to slow to around 2.5 per cent, while inflation persists at around 4.0 per cent throughout 2026. The combination of economic slowdown and high inflation is expected to weigh on the growth of the global insurance industry.

Swiss Re forecasts that real global insurance premium growth will reach only 1.3 per cent in 2026, down from 3.9 per cent in 2025. The general insurance (non-life) segment is projected to grow by just 0.6 per cent, well below the historical average of 3.6 per cent. This weakening is influenced by increased tariff competition, slowing economic activity, and the market entering a soft market phase. Despite this, Swiss Re assesses that the current weakening cycle will not be as deep as previous periods because claims inflation and geopolitical uncertainty remain relatively high. Conversely, life insurance is expected to maintain growth of around 2.3 per cent. High bond yields are driving savings and annuity businesses, while increasing insurance penetration in developing countries supports long-term growth. On the profitability side, insurance companies still receive support from higher investment returns due to interest rates remaining at relatively high levels.

The most striking finding in the Swiss Re Institute report is the emergence of an AI investment wave expected to reach US$750 billion in 2026. This investment includes the construction of hyperscale data centres, semiconductor facilities, power grids, cloud computing centres, and various other AI-supporting infrastructure. According to Swiss Re, this investment not only becomes a new engine of economic growth but also creates unprecedented protection needs. Every large-scale data centre construction carries extremely high asset values. Some of the latest AI facilities are estimated to have asset values exceeding US$20 billion before computing equipment is installed. This condition increases the need for various types of protection, ranging from construction, property, and engineering insurance to business interruption and reinsurance.

Swiss Re assesses that data centre growth will be one of the fastest-growing insurance markets over the next five years. Data centres face different risk characteristics compared to conventional buildings. Besides having a very high concentration of assets, these facilities are heavily dependent on electricity supply, cooling systems, communication networks, and cyber security. Risks of fire, power outages, floods, earthquakes, and cyber attacks can cause billions of dollars in losses in a short time. Therefore, Swiss Re expects global data centre insurance premiums to increase from around US$10.6 billion to more than US$24 billion by 2030. Beyond property and engineering, AI development is also expected to accelerate the growth of the cyber insurance market. The wider use of AI means a greater potential for cyber attacks on digital infrastructure. Data centres, cloud service providers, technology companies, and manufacturing industries are prime targets. In addition to data theft risks, the use of AI also presents new challenges in the form of algorithmic errors, AI model failures, and potential lawsuits arising from automated decisions made by artificial intelligence systems. This condition expands the need for cyber and liability insurance protection.