Page 45 - The Insurance Times July 2025

Market Report 2025

IAIS mid-year Global Insurance Market Report 2025 reflects

insurance sector resilience

T he International Association of Insurance Supervisors impact insurers' balance sheets by weakening asset valua-
(IAIS) today released the mid-year update of its Glo-
tions and challenging liability management, although diver-
bal Insurance Market Report 2025. The report, based on sification has helped maintain stable returns.
preliminary findings from the IAIS’ 2025 Global Monitoring
Exercise (GME), analyses emerging trends and risks within Key sector-wide themes in the 2025
the global insurance sector.
GME
“The mid-year GIMAR provides timely insights into evolving Each year, the IAIS identifies sector-wide themes which are
challenges and opportunities for the global insurance sec- top of mind for insurance supervisors globally. For 2025,
tor,” said Shigeru Ariizumi, Chair of the IAIS Executive Com- these focus on:
mittee. “By identifying emerging risks and trends such as 1. Geoeconomic fragmentation
geoeconomic fragmentation, growing investment in private Rising geopolitical tensions and economic divisions are
credit and the increasing adoption of AI, the IAIS equips its creating significant challenges for insurers, including
members with the knowledge needed to strengthen super- credit, foreign exchange, liquidity, interest rate and un-
visory practices and promote stability of the sector in the derwriting risks. Insurers are responding with robust risk
face of rapid change.” management strategies, such as asset reallocation, sce-
nario testing and crisis response planning.
Interim results 2. Private credit investment
The interim results highlight stable solvency and profitabil- IMF research finds that global private credit invest-
ity positions, in aggregate, in the global insurance sector, ments reached $2.1 trillion in 2023 with annual growth
supported by strong operational performance, effective rates of 20% in North America, 17% in Europe and 20%
asset-liability management, and robust capital buffers. Li- in Asia. Insurers are balancing the diversification and
quidity positions have also improved for many insurers, al- stable long-term cash flow benefits of investments in
though some challenges persist due to increased allocations private credit with risks such as credit, concentration,
to illiquid assets, market volatility and dividend payments. liquidity and valuation challenges.1 The IAIS is conduct-
Aggregate systemic risk scores of global insurance groups ing an in-depth analysis of insurers’ private credit invest-
at year-end 2024 were consistent with those at year-end ments to better understand potential vulnerabilities
2023. While certain indicators saw increases, such as intra- and refine supervisory practices.
financial assets and level 3 assets, these were offset by re-
3. Artificial intelligence (AI)
ductions in indicators linked to minimum guarantees on
variable products and derivatives holdings. AI offers insurers opportunities to enhance efficiency
and improve risk selection leading to better consumer
In 2025, global economic growth is expected to slow, driven outcomes but also introduces risks that require robust
by trade conflicts, market volatility and rising debt chal- governance and risk management. The IAIS is examin-
lenges. Disorderly disruptions in financial markets could ing AI adoption in the insurance sector, with a focus on

40 July 2025 The Insurance Times