Gallagher Report: Geopolitical and Economic Shifts Reshaping Insurance Market
Gallagher’s Structured Credit and Political Risk (SCPR) Insurance Market Report has been released, offering a comprehensive overview of market capacity, recent developments, and country-specific risk assessments. The study, conducted in collaboration with Pangea-Risk, delves into the role of SCPR insurance amidst fluctuating geopolitical and economic landscapes.
The report emphasizes the expanding market capacity, as insurers increasingly provide coverage for long-term risks. Geopolitical instability, especially in the Middle East and Africa, coupled with shifts in economic and foreign policy following a second term for Donald Trump, are expected to influence trade and investment.
The report estimates political risk and contract frustration market capacity at approximately $3.5 billion per risk, reflecting expanding underwriting capabilities. The report highlights that tensions, including the ongoing conflicts in Ukraine and the Middle East, will continue to impact global markets.
SCPR Market Capacity on the Rise
The market capacity update for January 2025 indicates growth across various SCPR segments. Political risk capacity has increased to $3.45 billion, up from $3.35 billion in mid-2024. Contract frustration risks are covered by approximately $3.57 billion, while commercial risk capacity has risen to $2.99 billion. Non-trade risks also show substantial growth, with a market capacity of $2.46 billion, reflecting the insurance sector’s overall expansion. This growth is attributed to a surge in insurer participation and growing demand for structured credit and political risk coverage.
Risks in Emerging Markets
The report sheds light on emerging market risks. In the Democratic Republic of the Congo (DRC), ongoing insurgent violence continues to negatively affect the country’s political, security, and economic prospects. The M23 insurgent group launched a significant offensive in early 2025, seizing provincial capitals and their airports.
In Ivory Coast, political violence and civil unrest are anticipated to rise ahead of the October 2025 presidential election. The potential for President Alassane Ouattara to seek a fourth term, which is likely to draw opposition, is noted as a potential trigger for pre- and post-election unrest.
Country-Specific Outlooks
Saudi Arabia
Saudi Arabia’s 2025 economic outlook will be shaped by several factors, including lower interest rates, increased oil production, and substantial domestic investment linked to Vision 2030. Public sector spending on infrastructure projects such as Neom and Diriyah Gate is expected to support private sector expansion. The report suggests that political shifts in Syria, potentially diminishing Iranian influence, could open economic opportunities for Saudi Arabia. Domestically, efforts to normalize regional relations with Israel may create tensions, given public support for the Palestinian cause.
Türkiye
Türkiye is expected to uphold a geopolitical balancing strategy, managing relations with Western allies and emerging economic partners like BRICS. The government’s main focus is expected to be on currency stabilization, inflation reduction, and management of external debt payments. However, fiscal policies may impact public spending and overall economic stability.
Egypt
Egypt faces economic and security challenges, with military dominance affecting economic reforms. Geopolitical instability in the region adds further pressure. Fiscal consolidation, external debt burdens, and persistent inflation remain major concerns, despite some support from international financial institutions. The report also highlights geopolitical realignments in the Horn of Africa, which could test Egypt’s diplomatic and economic strategies.
