This chapter shows that macroeconomic, disaster and cyber risks, along with financial market volatility, are regarded by national authorities as the main risks and vulnerabilities facing the insurance industry in their jurisdiction going forward.
Global Insurance Market Trends 2025
Abstract
The insurance sector faces multiple risks. According to information obtained from the qualitative questionnaire circulated as part of the Global Insurance Statistics exercise, national authorities frequently identified macroeconomic, disaster and cyber risks as well as financial market volatility as being potential risks or vulnerabilities for their insurance sector going forward, or for certain insurers (Figure 6.1).
% of respondents identifying the risk
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Insurance Statistics
National authorities most frequently cited macroeconomic risks such as inflation and interest rate volatility as being relevant or potentially relevant for insurers in their jurisdiction. For instance, Australia reported that uncertainty about the economic outlook and higher premium rates are key factors in policyholders lapsing their existing policies or underinsuring. Mexico noted that high inflation could reduce the value of the amount that beneficiaries would receive from some life insurance policies and that, in auto or health insurance, inflation could make claims costs more expensive to insurers, compressing underwriting margins. France reported that since French insurers hold a significant number of bonds, interest rate risk is the primary market risk they face and thus any sudden increase in interest rate volatility could affect insurers.
Many jurisdictions highlighted also the importance of disasters risks. For instance, Bulgaria, Ecuador and Greece reported that they are vulnerable to disasters and these events are expected to increase. France noted that disaster events were one of the main risks to which the non-life sector was exposed. Nicaragua also noted that the main risks facing the insurance sector in the country related to natural hazard disaster events, given its geology and geographical location. Portugal reported that the most concerning catastrophic risk at national level was related to earthquake; to a lesser degree, climate risks such as floods, wildfires, or windstorms were also a concern.
National authorities also often cited cyber risks as being relevant for the insurance sector. For instance, Peru reported that growing reliance on technological tools for data storage, cloud processing, and other digital solutions aimed at expanding product offerings through online channels have made cybersecurity a persistent risk for insurance companies. Australia noted that cyber risk has continued to escalate due to the increasing frequency and sophistication of cyber-attacks, the growth of digitisation, the exposure and reliance on external service providers and the interconnectedness of the financial system. Denmark also mentioned that cyber risk is a main risk for all companies and most companies have had projects related to implementing the European Union Digital Operational Resilience Act (DORA).1
Some jurisdictions also identified financial market volatility and/or financial market developments as being relevant. For instance, Bermuda reported that volatile financial markets pose a challenge for maintaining insurer investment valuations. Colombia noted that increased market volatility may impact strategic decisions regarding investment, liquidity and asset allocation, and could place additional pressure on solvency indicators if unrealised losses are realised. Lithuania indicated that financial market volatility might have indirect effects; these include decreasing confidence in insurance-based investment products, which may lead to a decline in business volumes and an increase in surrenders or partial withdrawals.
A few jurisdictions noted liquidity, solvency or reputational risks as being relevant or potentially relevant for their insurance sector. Other risks were identified. For instance, Ecuador noted that regulatory changes and political instability posed additional risks by potentially altering the operating environment and investor confidence. For Costa Rica, it was reported insurance companies faced challenges relating to the implementation of the IFRS 17 and IFRS 9 standards, with several companies expressing material and technological difficulties.
The insurance risk dashboard prepared by EIOPA on a quarterly basis provides further perspectives. The April 2025 dashboard, based on Q4-2024 Solvency II data and Q1 2025 market data, shows that many of the risks had a stable outlook for the next 12 months (EIOPA, 2025[18]).2 By contrast, the dashboard suggested heightened macroeconomic risks, market risks, environmental, social and governance-related risks, and digitalisation and cyber risks.
← 1. The Digital Operational Resilience Act (DORA) is a regulation introduced by the European Union to strengthen the digital resilience of financial entities.
← 2. The Insurance Risk Dashboard, based on Solvency II data, summarises the main risks and vulnerabilities in the European Union’s insurance sector through a set of risk indicators. The data is based on financial stability and prudential reporting collected from insurance groups and solo insurance undertakings (See https://nexteuropa-multisites.s3.eu-west-1.amazonaws.com/www.eiopa.europa.eu/assets/insurance-risk-dashboard/EIOPA_BoS-25-174_April-2025-insurance-risk-dashboard.html )