Global Insurance Industry Records Strong Profits Despite Rising Geopolitical Risks
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MENAFNThe OECD’s Global Insurance Market Trends 2026 report, published on Nov. 2, found that both life and non-life insurance markets experienced substantial premium increases, while profitability improved in most jurisdictions. The findings indicated that insurers managed to withstand recent macroeconomic pressures relatively well.
Total insurance penetration across OECD jurisdictions reached an average of 6.6% of gross domestic product (GDP) in 2025, compared with 6.2% the previous year. In reporting countries outside the OECD, the figure also increased, rising from 3.7% to 4.2% during the same period.
The report identified a modest reduction in life insurance penetration, while non-life insurance coverage expanded over the past decade. Outside the OECD, life insurance penetration increased, whereas non-life insurance penetration remained largely unchanged.
Significant differences persisted between income groups. Insurance penetration in lower-middle-income countries stood at just 0.7% of GDP last year, considerably below the 6.7% recorded in high-income jurisdictions.
Non-life insurance premiums continued to expand in real terms, although growth moderated. Premiums increased by 8.7% in nominal terms and 4.1% after adjusting for inflation, with 46 of the 53 reporting jurisdictions recording real growth.
Higher premiums were largely supported by pricing changes introduced by insurers to compensate for rising claims expenses, particularly in motor and health insurance. Inflation affecting operating costs, increasing healthcare expenditure and damage caused by extreme weather events also contributed to higher claims payments across several markets. Nevertheless, underwriting results remained favorable in most jurisdictions.
Data from 39 jurisdictions showed that 34 recorded combined ratios below 100%, reflecting underwriting profitability. Slovenia reported a ratio of 72.6%, followed by Nicaragua at 74.7%, Paraguay at 81% and the United States at 92.9%.
By contrast, Colombia, Argentina, Finland and El Salvador recorded ratios above 100%, indicating that claims and operating expenses exceeded the premiums collected by insurers.
Life insurance markets also maintained solid momentum, with premiums increasing by an average of 8.7% in nominal terms and 4% in real terms during 2025. Real premium growth was reported in 41 of the 52 jurisdictions covered, including Türkiye.
The expansion was supported by stronger interest in investment-linked insurance products, favorable financial conditions, pension system reforms and the expansion of occupational pension schemes, among other factors.
However, life insurance claims payments declined in inflation-adjusted terms in approximately half of the reporting countries. Investment performance also varied from one market to another compared with the previous year, reflecting inflationary pressures, higher long-term interest rates and differences in insurers’ investment portfolios.
Despite these variations, profitability remained robust across the sector. Insurers recorded average returns on equity of 16.7% in life insurance and 15.7% in non-life insurance.
The global reinsurance industry also strengthened its financial position, with available capital reaching a record $785 billion by the end of 2025. This increase was supported by a 45% jump in catastrophe bond issuance, which climbed to $25.6 billion.
Major insurance companies also delivered profitable results during the year, posting an average return on equity of 19% for the third consecutive year. Their strong performance contributed to downward pressure on reinsurance pricing.
Despite the industry's financial strength, the global risk environment remained difficult. National authorities continued to identify climate-related threats and cyber risks among the most significant challenges facing insurers.
The cyber insurance market expanded to an estimated $15 billion. Coverage penetration among large corporations ranged from 60% to 85%, while adoption among small and medium-sized businesses remained considerably lower, at between 10% and 30%.
Meanwhile, insured losses resulting from natural disasters declined to $107 billion globally, compared with $137 billion in 2024. Total economic losses also decreased, falling to $220 billion from $318 billion a year earlier.
Climate-related threats continued to feature prominently in the risk outlook, while geopolitical developments attracted growing attention because of their potential effects on economic conditions and insurance claims costs, the report concluded.
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