Demand for political risk insurance is projected to increase by 33% as a result of tariff uncertainties and the volatile nature of the current trading landscape, according to Howden’s 2025 survey of multinational corporations generating revenue exceeding US$1 billion.

Heightened geopolitical tensions, fluctuations in financial markets, trade ambiguities, supply chain realignments, and competition over critical minerals are fueling the need for protection through credit and political risk insurance (CPRI), Howden’s report titled “Opportunity in Flux” reveals.

“CPRI remains a vital growth facilitator by safeguarding investments, enabling trade, and stimulating economic activity during a period of significant global instability,” the report notes.

A primary insight from Howden’s findings highlights the sector’s considerable growth potential for insurers and their clients. Despite recent economic and geopolitical shocks, the sector has maintained strong performance, with net combined ratios ranging between 70-80%, rivaling the market’s best underwriting standards.

“This resilience is not due to random fluctuations in loss experience — this era has witnessed a series of economic and geopolitical upheavals, including the COVID-19 pandemic and associated recession, elevated inflation, conflicts in Ukraine and the Middle East, and current tariff uncertainties — but rather reflects robust underwriting practices and alignment of interests between insurers and policyholders that help contain losses,” the report explains.

Significant Market Premium Size

“With a premium pool of US$49 billion spanning six distinct product categories,” the combined CPRI and surety market exceeds the scale of many other high-profile specialty insurance sectors, such as marine and energy, according to Howden.

The six product segments outlined in the report include: U.S. admitted surety & fidelity, international surety, trade credit, non-payment, export credit agencies, and political risk.

Although the market has demonstrated robust performance, growth in CPRI premiums has lagged behind faster-growing, more volatile, or longer-tail insurance lines, the report states.

For instance, between 2019 and 2023, the property insurance market expanded at a rate up to three times that of trade credit, while cyber insurance achieved nearly five times the growth rate over the same timeframe.

Given the softening insurance cycle overall, Howden argues that this is an opportune moment to attract new entrants and encourage existing CPRI providers to expand into new asset classes and geographic regions, increase their commitments, and foster innovation.

The main challenge — and Howden’s call to action — is to ensure underwriting capacity and flexibility can evolve in line with shifting client demands.

Supply and Demand Disparities

“The perceived complexity of some CPRI products, combined with reinsurers’ preference to operate within a narrow volatility range, has created supply and demand imbalances in specific market segments,” Howden observes, noting that market conditions have somewhat eased over the past year.

“Reinsurance remains pressured, with participation limited to a small number of recognized lead underwriters, and a cautious approach that results in inflexibility which can hinder growth and strain relationships,” the report states. “Several large capacity providers continue to hesitate, largely influenced by negative news about the risk environment and, at times, a fundamental lack of product understanding.”

Nonetheless, market leaders in CPRI have demonstrated that these obstacles can be surmounted, generating highly attractive and diversified underwriting income by accumulating experience and expertise.

Expanding Market Potential

“There is clear scope for higher growth rates in today’s environment; CPRI makes a compelling proposition for both buyers and capacity providers by supporting businesses to invest and trade amid elevated volatility while delivering leading underwriting outcomes,” the accompanying press release asserts.

“The exceptional long-term performance of the CPRI market reflects deep sector expertise embedded throughout the value chain. With rising demand for CPRI coverage, the market must elevate its efforts further,” said Matthew Strong, Deputy CEO of Howden CAP and Head of Credit and Political Risk.

“This will promote global economic expansion by increasing underwriting commitments and fostering innovation, providing businesses, lenders, and public sector entities worldwide the certainty necessary to trade and invest confidently,” he added.

“Opportunity is the dominant theme from our report. Although risk levels are heightened in this fractured global landscape, the purpose of CPRI is precisely to offer protection enabling clients to navigate and invest despite such uncertainty,” said Phil Bonner, Managing Director, Global Specialty Treaty, Howden Re.

“Our market achieves this uniquely, delivering outstanding underwriting performance that rivals any other insurance product line. As demand for protection grows in response to global instability, our message to the market is to not only ensure sufficient capacity but also to embrace underwriting flexibility and creativity that adapt to clients’ evolving needs,” Bonner concluded.