The global insurance sector remains financially resilient despite growing geopolitical tension, macroeconomic uncertainty and cyber threats, according to the International Association of Insurance Supervisors.

The group’s mid-year Global Insurance Market Report finds insurers generally ended last year with stable solvency, liquidity and profitability, supported by strong operating performance, asset-liability management and capital positions.

Aggregate systemic risk scores for global insurance groups increased slightly at the end of last year compared with a year earlier. Liquidity remains satisfactory although higher allocations to illiquid assets, together with dividend payments, debt repayments, share buybacks and market volatility, continue to warrant close monitoring, IAIS says.

The biggest risk score increases were linked to insurers’ potential need to liquidate assets to generate cash during periods of market stress, and growing interconnectedness between insurers, financial markets and the broader economy.

The regulators say an increasingly complex risk environment is prompting them to intensify scrutiny of how insurers manage emerging threats.

Three key themes identified by IAIS for deeper supervisory analysis this year are macroeconomic conditions, geopolitical instability and artificial intelligence.

Challenging economic conditions particularly affect the life sector, where higher interest rates, widening credit spreads and inflation are testing balance sheets because of long-duration liabilities. Supervisors say many insurers are responding through asset reallocation, scenario analysis and liquidity stress testing.

Global conflicts affect general insurers through disrupted energy markets, higher claim costs and increased underwriting uncertainty. Insurers are strengthening capital and liquidity buffers in response.

The whole sector is challenged by the growing complexity of cyber risks, particularly with the adoption of frontier AI models, the IAIS says. Regulators are assessing what this means for effective operational resilience.

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