Reinsurers will also face further losses arising out of severe convective storms affecting major economies across Europe and in the United States in the years to come. This occurs where climate change alters atmospheric pressures leading to large hail, heavy rainfall and strong winds. This will in turn result in both casualties and substantive material damage in developed areas. It is expected that losses will run to hundreds of millions in Europe, whereas in the United States the insurance market can expect losses in the tens of millions. The increase in losses will have disruptive effects on the reinsurance industry, exacerbating hikes in reinsurance premiums and requiring considerable underwriting acumen to minimise disruption, including disproportionate financial exposure for the market.

China’s insurance market continues to demonstrate remarkable growth momentum. In 2024, nationwide premium income exceeded RMB5.7 trillion (US$800.6 billion), representing an 11.5% year-on-year increase and underscoring the resilience of insurance demand despite broader economic pressures. Rising risk awareness among households and the expanding need for liability, health and property protection among corporates suggest that, by 2026, premium growth will continue to outpace the wider economy. At the same time, the rapid rise of the Shanghai International Reinsurance Exchange is reshaping the market landscape. By September 2025, 118 institutions had secured trading seats, including 28 foreign participants, highlighting its emergence as a hub for cross-border risk diversification and capital allocation. Looking ahead, regulatory innovation and real-time clearing mechanisms are expected to catalyse further co-operation between domestic and international players, cementing China’s growing influence in the global reinsurance arena. For insurers worldwide, this represents both an entry point to the Chinese market and a strategic opportunity to enhance international risk management and collaboration.

The volume of reinsurance claims will likely trend upwards, especially from natural catastrophes, with reinsurers facing margin pressure due to both increased loss activity and softer market conditions. The sector will remain profitable, but with heightened volatility and a greater focus on risk selection and capital management. At the same time, we expect to see accelerated adoption of parametric risk transfer solutions within reinsurance programmes as a way for reinsurers, and cedents, to better manage the evolving risk landscape.

As policy wordings in the primary insurance market evolve to address the growing role of AI in business operations, insurers will increasingly look to their outward reinsurance arrangements to ensure that AI-related risks affirmed at the primary level are also adequately covered under their reinsurance programmes. Equally, reinsurers may seek to condition or exclude AI-related risks which may impact how reinsurance claims are adjusted.

We will likely see further development in terrorism policy wordings as a result of the 2025 update to Pool Re's Treaty. The update introduced several amendments which we will see carried forward into policy wordings. Changes include a bifurcation of risks into conventional and non-conventional terrorism, which insurers may seek to replicate into their wordings. We anticipate further innovation and expect a shift away from standalone terrorism cover towards an embedded cover that reintroduces cover into standard commercial property wordings.

The German coalition government has announced a landmark step toward strengthening climate resilience: the planned introduction of a mandatory natural hazards insurance for residential buildings. Under the new framework, all new property insurance policies must include cover for floods, storms, and other natural hazards, while existing contracts will be extended by a set deadline. An opt-out mechanism remains under review, balancing consumer choice with universal protection. To safeguard long-term insurability, a state-backed reinsurance scheme will be created, and policy conditions will be more closely regulated. The agreement also highlights the responsibility of planning authorities in high-risk areas and proposes clearer liability rules. This initiative marks a decisive shift in risk management, aiming to protect homeowners and tenants alike while fostering greater accountability among public institutions. It signals a future in which comprehensive disaster coverage becomes a standard, not an exception.

Crisis management products will become fundamental elements of risk managers' insurance portfolios as global conflicts continue. In March 2025, global (re)insurer MS Amlin bound a reinsurance scheme that could provide €1 billion in war risk cover annually to Ukrainian SMEs insured by three local Ukrainian insurers. This innovative scheme aims to stimulate business activity growth with a view to a post-war Ukraine's reconstruction. While, at the time of writing, resolution of the Ukrainian conflict may seem far away, the Ukraine reinsurance facility is an example of just how London and international (re)insurance markets can and do act to promote the reconstruction and recovery of war-torn regions and countries. One hopes that global conflicts will find peaceful resolution in the coming 12 months and, if they do, we predict the insurance market will be ready to de-risk peacetime investment.

With the major reinsurers reeling from the estimated US$40 billion insured losses from the massive wildfires in Los Angeles in January 2025, an urgent reassessment of portfolios, rates and retentions is underway. Europe is the key focus, where reinsurers fear that the risks have been underestimated, a concern highlighted by the European Insurance and Occupational Pensions Authority which said recent trends show France, Greece, Italy, Portugal and Spain all have the potential to suffer annual economic losses of over US$2.5 billion from wildfires. Governments and regulators in Europe will be watching the response of the market in terms of availability and affordability of cover as they will not want to see the protection gap for catastrophe losses widen. A recent report said this was already at a level that was leading to talk of state intervention in Greece, Portugal, Croatia, Cyprus and Austria. This could take the form of joint public-private insurance schemes or obligations on insurers to take on wildfire risks if they want to operate in risk-prone regions.

Since March 2025, the National Financial Regulatory Administration of China has abolished the US$2 billion total asset threshold for Hong Kong and Macau financial institutions investing in mainland insurers, signalling not only a new stage of opening-up but also a fresh source of momentum for the industry. Looking ahead to 2026, a broader spectrum of smaller Hong Kong and Macau institutions is expected to enter the market, bringing with them more diverse governance practices and innovative approaches. Cross-border collaboration, particularly within the Greater Bay Area, is set to gain pace in health, pension and green insurance, directly addressing the pressing societal needs of an ageing population and the green transition. Meanwhile, wider foreign participation is likely to elevate disclosure standards and strengthen governance frameworks, thereby enhancing public trust in the sector. Overall, this policy both widens the channel for overseas capital and conveys China’s firm commitment to deepening financial liberalisation, with its social impact unfolding through cross-border integration, support for the real economy and improvements in public welfare.

Insurers are likely to undertake a comprehensive review of policy wordings, particularly in home and travel insurance, in 2026. In the latter part of 2025, Which? submitted a 'super-complaint' to the Financial Conduct Authority focusing on several problems identified in home and travel insurance. Consequently, and despite insurers having undertaken significant steps over the last few years to simplify their wordings in light of various regulatory pressures, insurers may seek to undertake a root-and-branch review of such products, including a focus on clear policy wordings.

By 2026, the ongoing rollout of Brazil’s open insurance framework may foster a wave of innovation and competition across the sector. If data-sharing protocols and interoperability standards are widely adopted, consumers could benefit from more personalised products, easier policy comparisons, and improved movement between insurers. New entrants, including fintechs and insurtechs, might leverage open data to offer tailored solutions and challenge established players. However, the pace and impact of open insurance will depend on regulatory clarity, industry collaboration, and consumer trust in data privacy and security. If these factors align, open insurance could reshape how Brazilians interact with insurance providers and drive broader financial inclusion.

Brazil is set to make significant progress towards establishing a national social insurance scheme for catastrophic events, such as floods and landslides. Following devastating climate disasters and a persistent protection gap, the government, through the insurance regulator's dedicated working group and with strong support from Congress and the insurance industry, is working to design a public-private catastrophe insurance model. The scheme will focus on providing rapid, emergency payouts to low-income and vulnerable populations, with eligibility and funding mechanisms shaped by ongoing stakeholder consultations. While full implementation may extend beyond 2026, the year will mark a turning point as Brazil moves from political debate to concrete regulatory proposals and pilot programmes, setting the stage for a more resilient and inclusive disaster response system.