The Big Question: Can insurers meet the growing demand for political violence, credit and political risk solutions?

With 2024 seeing significant political change and upheaval coupled with the ongoing conflicts in Ukraine, and the Middle Eas,t the threat of political violence continues to increase.

With over half the world’s population having  taken part in national elections last year the political environment remains uncertain with the threat of widespread tariffs to be introduced by the USA at the start of April.

The threats have alerted brokers and underwriters. This month Marsh has published its Political Risks Report 2025 which warned organisations are more at risk of acute supply chain failure in 2025 as a result of heightened global geopolitical tensions and protectionist trade strategies.

According to the report, organisations that trade with connector countries – such as Vietnam, Mexico, South Korea, and Hungary – to circumvent existing or anticipated trade controls, or have suppliers doing the same, may be prone to greater trade policy-induced disruption in the months and years ahead. As a result of deteriorating relations between major trading partners, governments may also impose trade barriers on goods from connector countries – especially those that include components from the originally targeted country – which could create significant global supply chain volatility. 

The risk of an escalation in the Russian invasion of Ukraine continues to dominate the thinking of countries across Europe. The USA’s efforts to broker a peace deal remain problematic and the relationship between the Trump administration and its NATO allies remains fraught. The end of the ceasefire in Gaza and the increasing involvement of Hezbollah and the Houthi military threatens to ignite a regional conflict. It is against these threats that companies are seeking to mitigate their risks and are looking for a response from insurers.

Ian Summers, Global Business Leader, AdvantageGo.

Jeremy Shallow, CUO at Westfield Specialty International (subject to regulatory approval), says a complex and volatile geopolitical landscape will drive growing demand for insurance as businesses and governments seek protection against an array of risks.

“2025 is already threatening to be a transformative year for the political violence insurance and credit and political risk markets,” he continues. “Geopolitical instability, evolving global power dynamics, and the ongoing impact of regional conflicts are driving significant changes in both the risk landscape and demand for insurance cover.”

Shallow adds: “The global political environment is turbulent, driven by unresolved conflicts, shifting alliances, and the unpredictability of political regimes. The Trump presidency has introduced uncertainty into U.S. foreign policy. Efforts to negotiate an end to the Russo-Ukrainian conflict are leading to some optimism.

“However, if these efforts are rushed or perceived as favouring one side, they could spark further instability. For instance, a poorly structured deal could embolden other regimes, notably China, whose actions in the South China Sea are being closely watched.”

“Russia itself faces mounting internal pressures, including economic strain and declining morale among its military forces,” he explains. “Although the collapse of the Putin regime remains unlikely, history has shown that authoritarian governments can unravel quickly under the right conditions. Such a scenario would not only amplify risks within Russia but also destabilize its sphere of influence. Insurers will need to closely monitor these developments to adjust risk models and tailor coverage to evolving realities.”

The situation in Ukraine continues to cast a shadow.

“The prolonged Russia-Ukrainian conflict – and the accelerated efforts to negotiate a ceasefire – continue to shape the risk landscape in Eastern Europe and beyond,” Shallow says. “Although insurers have largely ceased underwriting risks in Ukraine due to the war, a resolution of the conflict could catalyse a surge in demand for insurance. Reconstruction efforts, underpinned by substantial Western capital investment, will require extensive credit, infrastructure, and political risk coverage.

“Businesses entering the region post-conflict will seek protection against potential disruptions as Ukraine rebuilds its energy infrastructure and supply chains.”

“However, any optimism surrounding a resolution must be tempered by the challenges of rebuilding a war-torn economy. With significant uncertainty surrounding the terms of any peace deal, underwriters must adopt a cautious approach, carefully evaluating risks while exploring opportunities to support regional recovery through bespoke insurance solutions.”

However regional conflicts and instability are not restricted to central Europe.

“Beyond Eastern Europe, other regions are experiencing rising tensions and conflict,” explains Shallow. “In Georgia, the struggle between pro-Western and pro-Russian factions has intensified following elections at the end of 2024, increasing the risk of political violence and trade disruptions. Similarly, the Syrian revolution of December 2024, particularly in the wake of diminishing Russian influence, highlights the interconnected nature of regional conflicts. Israel and Hamas may have agreed a ceasefire in January and have been in the process of negotiating the exchange of hostages, but the renewal of airstrikes on Gaza shows that this conflict is unfortunately far from over.

“Elsewhere, in countries such as South Sudan, political and civil unrest further underscores the demand for insurance against political violence. Renewed violence — including the downing of a UN helicopter in early March leading to at least 27 fatalities — is placing the current power-sharing arrangement under threat and could lead to the further escalation of bloody warfare. For companies operating in these volatile environments, comprehensive insurance coverage is essential to mitigating the financial impact of such disruptions.”

Shallow adds the challenges provide opportunities for insurers.

“As businesses grapple with heightened risks, the political violence and credit and political risk insurance markets are poised to respond,” he continues. “Companies should increasingly seek to protect themselves against a wide array of exposures, from disrupted supply chains to political upheavals.

“Looking forward geopolitical uncertainty will persist. Insurers will need to remain agile in responding to emerging risks in order to provide the security businesses need to navigate these challenges.”