As the reinsurance market enters January 2026, it faces a landscape still shaped by geopolitical volatility and ongoing structural shifts. Following a year that reinforced political risk as a persistent factor, exposures linked to political violence, strikes, riots, civil commotion (SRCC), and broader war-related events remain central to market considerations, Howden said in a new report.
“Heightened risk volatility has been one of the few constants in a period of near-perpetual change. Strategic competition between major powers has intensified, whilst intrastate conflict and localised confrontations between governments and disaffected factions, including non-state actors, continue to rise,” Howden observed.
According to the firm, risk indicators have risen markedly in the 2020s, driven primarily by wars in Ukraine and the Middle East.
Howden’s report noted that 2025 was marked by shifting geoeconomic risks that fed into the January 1, 2026, renewals, while post-renewal moves in Venezuela and rising tensions around Greenland are heightening the risk of near-term supply-chain shocks and testing long-standing security alliances.
Meanwhile, hybrid warfare activity has also reportedly increased, with cyber attacks, drone incursions and sabotage more prevalent.
“Hostile actors are leveraging modern technology to target critical infrastructure, defence-industrial assets and aviation operations while obscuring attribution, further blurring the boundaries between political violence, war and economic disruption,” Howden said.
With this in mind, political violence and SRCC risks are expected to remain elevated in 2026, reflecting heightened geopolitical volatility and macroeconomic uncertainty influencing global risk conditions.
“The 1 January renewal demonstrated that, in the absence of a market-changing loss, these risks continue to be viewed as insurable, with capacity, expertise and capital available to support clients navigating an increasingly complex global landscape,” Howden explained.
The firm’s report continued, “More than two-thirds of multinationals now use political risk management tools, with usage expected to rise further later this decade. Political risk modelling constituted the largest increase of any risk management framework, consistent with strong growth observed during 2025.
“Persistent geopolitical and macroeconomic uncertainty is expected to continue driving demand for political violence, SRCC and political risk re/insurance in 2026.
“Coverage plays an increasingly important role in supporting cross-border investment and enabling more resilient supply chains across strategic sectors, including critical minerals, defence and advanced technologies.
“Whilst awareness is rising, a lack of understanding remains a key barrier to broader uptake, with many organisations still underutilising available solutions. This presents a clear opportunity for the market: for insurers and reinsurers to meet evolving client needs in a high-demand environment, and for buyers to access high-value protection that can deliver tangible benefits, including improved financing outcomes and cost-of-capital efficiencies.”
David Flandro, Head of Industry Analysis and Strategic Advisory, commented, “We are seeing a broadening of geopolitical risk: direct disruption through unilateral action and coercive statecraft, and indirect disruption via hybrid activity are becoming the norm.
“This blurs the traditional boundaries between political violence, war and economic disruption, with important implications for how risk is understood, modelled and ultimately transferred.”
“In an environment of persistent global instability, political risk insurance is not only a protective tool, but also an enabler of investment, resilience and more efficient capital allocation.
“As geopolitical and macroeconomic uncertainty becomes more entrenched, coverage is increasingly being used to support cross-border investment, strengthen supply chains and unlock financing across strategic sectors, including energy, defence and advanced technologies.”
Richard Miller, Managing Director, Specialty Reinsurance, Howden Re, concluded, “Political violence and SRCC risks are no longer peripheral considerations for the market.
“After several years of sustained geopolitical volatility and structural change, reinforced by elevated loss expectations across the current decade, these risks have moved decisively into the core of underwriting and capital decision-making. They are increasingly central to how capital is deployed, portfolios are structured, and risk is assessed.”
“Looking ahead, the sustainability of current conditions will ultimately be driven by loss experience and capital dynamics rather than headlines alone. Absent a significant market-changing event, we expect political violence and SRCC markets to remain competitive and well supplied in 2026.”
