As we reach a mid-point in 2026, firms across the insurance sector continue to respond to accelerated change and shifting global dynamics, according to Davies and its subsidiary, Asta.
Longstanding risks remain, but new forces are reshaping the landscape at speed: Geopolitical fragmentation, climate change, the rapid rise of artificial intelligence (AI) and the ongoing modernisation of the London insurance market.
Together, these trends are creating a more interconnected and strategically significant risk environment than we’ve seen for decades.
Opportunity amid geopolitical risk
Matt Lane (pictured), chief solutions officer, insurance solutions, Davies, says: “After an unusually stable period in global geopolitics, geopolitical competition has returned at pace.
“While this shift brings complexity, it also presents significant opportunities for insurers to demonstrate expertise, expand specialist offerings and play a central role in supporting global trade.
“As major economies compete for influence and sanctions become a more widely used foreign policy tool, demand is rising for products that help businesses navigate an evolving geopolitical landscape.
“For insurers, this environment creates space for innovation across political risk, trade credit, marine and trade finance lines. Clients are seeking deeper insight, tailored coverage and partners who can help them understand new markets and manage uncertainty with confidence.
Firms that invest in analytical capabilities, sanctions intelligence and specialised underwriting, stand to differentiate themselves and capture new areas of growth. Even as capacity shifts and pricing recalibrates, those able to adapt quickly will find fresh opportunities in markets that were previously underserved.”
Phillip Pearce, head of sustainability, Asta, adds: “Throughout 2025, the most prominent emerging themes identified were military conflict and escalating trade tensions, reflecting the increasing significance of shifts in the United States’ foreign policy and wider geopolitical realignments.
“These ultimately came to fruition during early 2026, as the world was, and still is, experiencing one of the busiest periods of active conflict in recent history. Meanwhile, political regime changes across Europe have added further uncertainty to policy stability and market expectations.
“These dynamics present considerations for insurers, including the US Supreme Court ruling over tariff regimes, potential volatility in pricing and consumer confidence and supply chain disruption. Heightened societal tensions can elevate the risk of civil unrest, contributing to property and business interruption losses, particularly as 2026 and 2027 carry some significant national elections. Yet, there are meaningful opportunities. Existing insurance products are well placed to respond to these shifts.
Furthermore, demand for protection against trade disruption, political uncertainty and geopolitical volatility is likely to support premium growth across several specialist lines.”
Climate challenge and innovation catalyst
Pearce goes on to say: “Despite heightened volatility driven by natural catastrophe losses, investment in renewable energy remains strong, even as geopolitical uncertainty creates supply chain vulnerabilities and shapes the pace of transition policies, including differing national approaches to a just transition.
The Middle East crisis has brought energy security to the top of the agenda, with short-termism and long-term sustainable energy security at a trade-off for most developed countries. Climate-related litigation is also evolving, with landmark advisory opinions and successful cases increasingly holding governments and high-emitting organisations to account.
“These shifts present both challenges and opportunities for the insurance sector. Rising catastrophe frequency and severity are widening the protection gap, as some regions face growing concerns about long-term insurability, while litigation trends may drive additional claims.
However, the opportunity for insurers to lead is significant. By partnering with policymakers, businesses and communities, the industry can help shape effective resilience and adaptation strategies, support the transition to cleaner energy systems and ensure that protection remains accessible as climate pressures intensify.”
AI’s transformative rise
Lane adds: “Artificial intelligence continues to drive a profound shift in how organisations operate. Decision making, underwriting, claims management, customer engagement and operational efficiency are all being reshaped by new AI capabilities. The benefits are already clear: Improved productivity, smarter use of data, faster processes and access to insights that were previously beyond reach.
“Rather than a cause for concern, the rapid growth in AI investment represents a major opportunity for insurers to rethink models, redesign workflows and deliver more personalised and efficient services. As organisations experiment, learn and refine their approaches, the market is expanding, opening the door for new products, enhanced analytics and differentiated client experiences.”
Pearce says: “The accelerating adoption of AI is both creating new opportunities and identifying new areas of exposure. As organisations embed AI into core operations, underwriters are seeing risks that accompany novel technologies, including litigation linked to misleading AI claims, errors arising from incorrect outputs and heightened cyber security considerations in sectors such as energy and critical infrastructure.
We’ve also observed recent lawsuits against major technology companies for failing to implement sufficient safeguards in the use of AI.
“Yet these developments present as many opportunities as challenges. The complexity of AI-related exposures is driving demand for new specialist products, creating an untapped market for premium growth.AI can also enhance underwriting performance by improving modelling precision, speeding up data processing and enabling more informed decision making. Where governance is strong, AI can become a meaningful enabler of underwriting excellence and market differentiation. However, social and environmental implications, such as job displacement and increased emissions must also be considered.”
Lloyd’s modernisation
In 2019, Lloyd’s signalled a bold new era with the launch of the Future at Lloyd’s manifesto; an ambitious commitment to modernise processes, technology and market infrastructure.
The market recognised that meaningful digital transformation would be essential to maintaining London’s global leadership and unlocking the benefits of emerging technologies adopted elsewhere.
Since then, Lloyd’s has unveiled its new five-year strategy, reinforcing its long-term commitment to building a more digital, efficient and globally competitive marketplace.
While modernisation has been a consistent theme for the market in recent years, the renewed strategy reflects a broader focus on improving operational efficiency, enhancing data and technology capabilities, and making it easier for capital and business to flow through the market.
Preparing for a more complex 2026 and beyond
The years ahead will be shaped by rapid change. Geopolitical shifts are influencing risk portfolios, AI is creating powerful new opportunities and climate pressures are driving demand for innovative resilience and protection solutions.
At the same time, the London market is navigating a pivotal digital transformation.
For insurers, brokers and risk leaders, success will rely on agility, smart scenario planning and a willingness to rethink long-standing assumptions.
Those who adapt quickly to technological, environmental and geopolitical trends will be best placed to thrive in an evolving landscape.
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