As the reinsurance market enters January 2026, it faces a landscape that remains shaped by geopolitical volatility and ongoing structural shifts. After a year in which political risk emerged as an ongoing factor, risks related to political violence, strikes, riots, civil disturbances (SRCC) and wider war-related events remain at the heart of market considerations, Howden said in a new report.
“Intensified risk volatility is one of the few constants during a period of near-permanent change. Strategic competition among great powers intensifies, while domestic conflicts and localized rivalries between governments and disaffected factions, including non-state actors, continue to intensify,” Howerton observed.
The company said risk indicators rose significantly in the 2020s, driven primarily by wars in Ukraine and the Middle East.
Howden’s report notes that 2025 is marked by changes in the geoeconomic risks that impacted the January 1, 2026 renewal, while post-renewal moves in Venezuela and rising tensions around Greenland are heightening the risk of near-term supply chain shocks and testing long-term security alliances.
At the same time, hybrid warfare activity has also been reported to have increased, with cyberattacks, drone intrusions and sabotage becoming more common.
“Hostile actors are using modern technology to target critical infrastructure, defense industry assets and aviation operations while blurring their attribution, further blurring the lines between political violence, war and economic disruption,” Howerton said.
With this in mind, political violence and SRCC risks are expected to remain elevated in 2026, reflecting increased geopolitical volatility and macroeconomic uncertainty affecting global risk profiles.
“The January 1 renewal demonstrates that, in the absence of market-changing losses, these risks are still considered insurable and that we have the capabilities, expertise and capital to support clients through an increasingly complex global landscape,” Howden explained.
The firm’s report continued: “More than two-thirds of multinational companies now use political risk management tools, with usage expected to rise further later this decade. Political risk models have seen the largest increase of all risk management frameworks, consistent with the strong growth observed through 2025.”
“Ongoing 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, defense and advanced technologies.
“While awareness continues to grow, a lack of understanding remains a key barrier to wider adoption, with many organizations still not fully utilizing the solutions available. This presents a clear opportunity for the market: insurers and reinsurers can meet changing customer needs in a high-demand environment, while buyers receive high-value protection that delivers tangible benefits, including improved financing outcomes and capital cost efficiencies.”
David Flandro, Head of Industry Analysis and Strategy Consulting, commented: “We are seeing geopolitical risks continue to expand: direct damage through unilateral actions and coercive statecraft, as well as indirect damage through hybrid activities, are becoming the norm.
“This blurs the traditional lines between political violence, war and economic disruption, with important implications for how risks are understood, modeled and ultimately transferred.”
“In an environment of continued global instability, political risk insurance is not only a protection tool but also an enabler of investment, resilience and more efficient capital allocation.
“As geopolitical and macroeconomic uncertainty becomes more entrenched, insurance coverage is increasingly used to support cross-border investment, strengthen supply chains and unlock financing in strategic sectors such as energy, defense and advanced technology.”
Richard Miller, Managing Director of Specialty Reinsurance at Howden Re, concluded: “Political violence and SRCC risk are no longer secondary considerations in the market.
“After several years of sustained geopolitical volatility and structural changes, coupled with rising loss expectations over the past decade, these risks have moved decisively into the heart of underwriting and capital decisions. They are increasingly important to how capital is deployed, portfolios are constructed and risks are assessed.”
“Going forward, the sustainability of current conditions will ultimately be driven by loss experience and capital dynamics, not just headlines. In the absence of major market-changing events, we expect political violence and the SRCC market to remain competitive and well-supplied through 2026.”
