Economic and Geopolitical Challenges
The insurance industry is entering 2026 in a context marked by economic and geopolitical volatility, increasing frequency and severity of natural events, and rising client expectations, according to the latest Deloitte report. Companies in the sector are compelled to rethink operational models, portfolios, and how they engage with stakeholders.
In the property & casualty (P&C) segment, margin pressures will continue, while premium growth is expected to slow until 2026 due to intensified competition, limited rate increases, and emerging costs ranging from tariffs to reserve adjustments. In advanced European markets such as France, Germany, and the UK, return on equity is projected to rise in 2025, yet margins in personal and commercial lines may deteriorate due to trade uncertainties, supply chain bottlenecks, and workforce shortages. In the U.S., the combined ratio is expected to gradually worsen in 2025–2026 after a strong 2024 underwriting performance.
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Import tariffs amplify risks across multiple lines: rising costs of auto parts and construction materials pressure claims and premiums, while delayed payments increase demand for commercial credit insurance, putting additional strain on insurers’ capacities. Exposure to natural catastrophes remains a global pressure point, with tighter reinsurance terms, higher retentions, and a global protection gap exceeding $180 billion, pushing insurers toward more agile capital models and market instruments.
Digital Transformation and the AI Shift
The report highlights that technological priorities are shifting from basic modernization to large-scale AI implementation, strengthening data foundations, and aligning architecture and security. Key growth areas include fraud detection, underwriting assistants, and customer interactions. Success depends on data quality, master data management, and cloud migration.
“The ‘human-AI’ model shifts focus from simple automation to work redesign, targeted upskilling, recruiting new skills, and external collaborations so that people can use, interpret, and apply AI-generated insights in high-stakes decisions,” the report notes.
In conclusion, Deloitte warns that uncertainty is expected to persist. Companies that revise their models, products, and relationships with distribution and clients are likely to enter 2026 better positioned, with resilient margins, flexible capital, and robust digital capabilities anchored in data and security.
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