Rising uncertainty driven by climate change, cyber threats and geopolitical tensions is forcing insurers globally to reposition resilience as a central pillar of their strategy, according to insights from a recent report by EY.
The report, part of its Global Insurance Outlook 2026, highlights how the nature of risk confronting the insurance industry is becoming more complex, interconnected and difficult to predict. It notes that extreme weather events, persistent cyberattacks and shifting geopolitical dynamics are no longer isolated occurrences but overlapping pressures that continue to reshape the operating environment for insurers.
While managing uncertainty has always been core to the insurance business, the report observes that the current wave of disruption presents a different challenge. Risks are evolving more rapidly, reinforcing one another and extending across markets and value chains, making traditional approaches to risk assessment less effective.
As a result, resilience is increasingly being repositioned from a contingency measure to a strategic capability embedded within core operations. According to the report, insurers are now expected to build systems and structures that can withstand ongoing disruption rather than respond to isolated shocks.
At the same time, the report identifies digital transformation as a critical enabler of this shift. It notes that beyond improving efficiency, digital capabilities are now essential for growth, innovation and operational agility. Insurers that fail to modernise their systems risk falling behind as customer expectations evolve and competition intensifies, particularly from non-traditional players entering the market.
A key challenge highlighted in the report is the continued reliance on legacy IT infrastructure. Many insurers operate complex systems developed over decades, often characterised by fragmented data and extensive customisation. This has created operational rigidity, limiting the ability of firms to respond quickly to market changes or scale new solutions effectively.
To address this, the report emphasises the need for system simplification, improved data accessibility and the adoption of integrated platforms that enable real-time insights. Such changes, it notes, are essential for enhancing customer experience, accelerating product development and supporting more efficient operations.
The report also underscores the growing importance of artificial intelligence, although it cautions that its impact remains limited in many organisations. While insurers have begun deploying AI tools such as chatbots and automation systems, these applications are often confined to peripheral functions.
According to the report, the full value of AI will only be realised when it is embedded within core business processes, including underwriting, claims management and customer engagement. Achieving this, however, requires high-quality data, modern system architecture and a redesign of existing workflows.
Regulatory developments are also adding to the urgency for transformation. The report references the European Union’s DORA as an example of how regulators are increasingly testing the operational resilience of insurers. The framework requires firms to demonstrate their ability to withstand disruptions such as cyber incidents and failures within critical third-party systems.
Beyond technology and regulation, the report identifies organisational culture and talent as critical factors in driving transformation. It notes that insurers are competing for specialised skills, including data analytics, artificial intelligence and cybersecurity expertise, while also needing to equip existing employees to adapt to new ways of working.
In this context, the ability to foster a culture of continuous learning and cross-functional collaboration is seen as essential for maintaining agility and long-term relevance.
Despite the challenges, the report points to emerging opportunities within the evolving risk landscape. It notes that insurers that invest in modern systems, deploy technology strategically and strengthen internal capabilities are better positioned to respond to shifting customer expectations and capture new growth opportunities.
Ultimately, the report concludes that uncertainty, while disruptive, is also acting as a catalyst for change across the insurance industry. Insurers that are able to adapt quickly and embed resilience into their operations are likely to gain a competitive edge as the sector continues to evolve.
