At the 29th Federation of Afro-Asian Insurers & Reinsurers (FAIR) General Assembly, held in Mumbai, India, industry leaders explored the future of risk management amid global uncertainties, including the growing challenge of political risks and how insurers and reinsurers can strengthen their ability to manage them effectively.During a panel discussion at the recent event, the moderator Amitabha Ray, Chief Executive Officer of Swiss Re India Branch, raised an important question on the industry’s capacity to handle these risks.“I do feel that with so many political risks, there is, obviously, a sense that capacity is not there,” he remarked.In light of the lack of capacity for political risks in an increasingly volatile world, Ray asked panellist Ahmed Al-JabrCEO of Saudi Re, how carriers could improve both the capacity and insurability of political risks, so that insurers and reinsurers can offer the right solutions in the future.

“I think the question of insurability is central to this discussion,” Al-Jabr stated.“If you can diagnose the issue, I think it’s insurability of new, emerging risks, but at the same time, it’s the size of the current risk as well.So, the gap exists on the scope as well as the scale,” explained Al-Jabr.

He further noted that insurers and reinsurers require time to “properly model and price the new, emerging risks,” highlighting the importance of understanding these exposures before committing balance sheets to unfamiliar territories.“So, they will not just put their balance sheet to be exposed to new risks that don’t have the understanding and proper history to deal with.” To address these challenges, Al-Jabr pointed to several viable solutions.“There are other solutions in the market.

We’ve seen some successful examples in subsidised programmes, especially in our regions, if we focus on the Africa and Asian markets,” he said.He mentioned that risk pools, particularly regional ones that extend beyond national borders, have shown promising results and could be further developed to enhance resilience.Al-Jabr also underscored the growing relevance of alternative capital in managing new types of risk.

“In light of the appetite of some investors to diversifying into cat and others, alternative capital I think is also one area that holds potential,” he remarked.He pointed to the broader insurance-linked securities (ILS) market, including industry loss warranties (ILWs), as mechanisms that could “help in managing the new risks and accessing capital from the financial market.” While the ILS market has expanded into various non-traditional areas, political risks remain largely absent from this space.To date, only a small number of terrorism catastrophe bonds have been issued, indicating that investor participation in political or conflict-related perils is still limited.

The handful of terrorism cat bonds we’ve seen so far includes the 2025 deal from Pool Re, , as well as its 2022 issuance Baltic PCC Limited (Series 2022-1) and 2019 issuance   In addition, there was also GAREAT’s Athéna I Reinsurance DAC terror cat bond deal from 2024.You can read about these terrorism risk cat bonds and hundreds of other deals in the extensive Artemis .Al-Jabr elaborated on how traditional insurers and reinsurers still have an important role to play.

“There could be an opportunity that insurers and reinsurers can provide technical expertise.They understand the exposure; they understand the risk.They may not have the appetite for it but maybe others have.” Highlighting market trends, Al-Jabr noted that 2025 has seen a record-breaking year for catastrophe bond issuances.

He said: “It’s no surprise that 2025 is a high record in terms of issuances of cat bonds, the first time it is more than $18 billions of issuances.” With declining interest rates, he suggested this could make such instruments even more attractive to investors.In closing, Al-Jabr offered a forward-looking message for the industry: “The message here is that we should be open to raising new forms of solutions as we go forward.” His remarks captured the conference’s wider sentiment, that innovation, collaboration, and alternative capital structures will be key to expanding insurability and meeting the demands of a complex, interconnected risk environment..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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