Willis, the risk advisory and insurance broking division of WTW, has published its latest Insurance Marketplace Realities report, examining how geopolitical tensions and the continued expansion of digital infrastructure are influencing the global insurance sector.
In the report, Willis said political risk is becoming a broader concern across international markets, with effects extending beyond individual industries into supply chains, infrastructure and financial systems.
The company noted that recent developments in the Middle East are expected to influence pricing within the political risk insurance market, with premiums in Gulf countries forecast to rise by between 20% and 30%.
Willis added that pricing for traditional political risk cover and trade disruption insurance is likely to remain stable or increase modestly by up to 5%.
According to Willis, insurers are increasingly assessing risk through a national security perspective, while organisations are placing greater importance on political risk insurance within wider enterprise risk management strategies. The company said geopolitical developments are continuing to affect global markets through changes in regulation, investment flows and operational stability.
“Geopolitical uncertainty is no longer a background risk. It’s a primary driver of volatility across the insurance market,” commented Jackie Bolig, Head of Placement and Broking Solutions for Corporate Risk & Broking, North America. “From supply chain disruption to energy security and regulatory divergence, we’re seeing global events translate into real, immediate impacts on risk and cost. Organisations need to evolve their risk strategies to account for a world where disruption is faster, more interconnected and harder to predict.”
Willis also highlighted the growing role of technology-related risk. The company said increasing demand for artificial intelligence and cloud-based services is driving significant investment in data centres and digital infrastructure, which are now widely regarded as critical assets. Willis stated that these developments are creating additional exposures across cyber, physical, energy and regulatory areas, encouraging businesses to adopt more coordinated risk management approaches.
The report found that favourable conditions for buyers remain in place across several insurance classes, particularly for organisations with strong claims performance. However, Willis said factors including tariffs, climate-related events, third-party litigation funding, reliance on AI technologies and geopolitical instability are contributing to a more challenging risk environment.
Willis reported that the property insurance market continues to experience softer pricing despite increasing climate volatility. The company said stronger competition among insurers and improved reinsurance conditions are contributing to premium reductions of up to 15% for single-carrier programmes and up to 25% for layered and shared placements.
At the same time, Willis warned that “secondary perils” such as floods, wildfires and severe storms are becoming more frequent and financially significant, increasing exposure in areas not previously viewed as high risk.
The company also identified tariffs as an emerging issue within the trade credit insurance market. Willis said that while the market remains competitive despite higher levels of insolvencies and claims activity, tariffs are adding inflationary pressure and reducing corporate margins, which may place additional strain on credit quality as businesses respond to rising costs and supply chain adjustments.
In addition, Willis highlighted continued growth in healthcare-related litigation costs. The report stated that the average value of the top 50 medical malpractice verdicts increased from $32 million in 2022 to $56 million in 2024, representing a 75% increase. Willis also noted that investor-backed litigation claims are associated with a 60.5% rise in payouts.
