Geopolitical instability and regulatory divergence are reshaping risk exposure across the insurance sector, according to Clyde & Co’s latest Corporate Risk Radar report.
Among surveyed senior executives, 58% identified geopolitical tensions as a key business risk. For insurers, the impact is particularly visible in reduced M&A activity. Clyde & Co’s Insurance Growth Report shows global insurance deal volume has dropped to its lowest level since 2009. Prolonged uncertainty and complex cross-border regulatory environments have become a drag on expansion plans.
“The world is moving from a globalized model to a more regionalized one,” said Ben Knowles, chair of Clyde & Co’s Global Arbitration Group. “That change brings structural challenges for cross-border insurance arrangements and policy alignment.”
Regulatory risk continues to grow, especially for intermediaries operating across multiple jurisdictions. The report highlights increased pressure on insurers, brokers and underwriters to comply with a widening range of national and regional standards, particularly around ESG disclosures, AI regulation and corporate transparency. Sam Clark, international general counsel at Lockton, noted that regulatory compliance is driving up costs and introducing operational strain.
Technology and data protection rules are now seen as a material threat, with 56% of respondents flagging privacy regulation as a significant risk. This trend has direct implications for insurance coverage and risk modelling, especially in cyber and D&O lines.
Meanwhile, Clyde & Co’s Sam Tate noted that failure-to-prevent regulations and disclosure obligations are expanding insurers' legal and reputational exposures, bringing new compliance requirements into scope for underwriters and insureds alike.
Litigation risk is also climbing. Forty-eight percent of respondents expect an increase in contractual disputes over the next year, with insurance claims arising from force majeure clauses, cost escalations, and delayed performance already climbing in sectors such as construction, infrastructure and energy. Clyde & Co partner James Roberts said the tighter legal environment is leading to more frequent and complex insurance claims.
Multinational insurers are also monitoring how regulatory divergence could affect portfolio performance. Agnieszka Kulińska, partner at Clyde & Co’s Warsaw office, said capital-heavy industries such ass energy and infrastructure are facing overlapping financial and environmental obligations, which could reshape underwriting appetite and capital allocation decisions.
At the same time, shareholder litigation and activism are becoming more prominent. Over half of respondents expect increased scrutiny of corporate governance decisions, which may lead to elevated D&O claims frequency. Clyde & Co’s Julie Cornély said these pressures could increase the need for liability coverage enhancements and closer alignment between boards and risk managers.
The findings suggest insurers are facing a shift in risk architecture. Traditional transfer mechanisms may not fully address evolving exposures, requiring more integrated approaches to underwriting, regulatory tracking and dispute resolution across global portfolios.
