Global reinsurance markets are currently in a strong financial position and, while the insurance industry has faced a few challenging years, most major reinsurers have maintained profitability and robust capital levels. This has resulted in a reasonably complex yet competitive global market, with insurers and reinsurers having to navigate evolving risks and adjust pricing and contract terms accordingly.
For example, the recent California wildfires are estimated to have resulted in losses ranging between $28 billion and $35 billion for the global reinsurance industry. Events like these underscore the importance of having a strong insurance and reinsurance sector that can weather significant losses.
“Despite the recent tough years, the global insurance and reinsurance industry is performing well overall. Reinsurers have increased pricing, tightened contract terms, and demonstrated a strong understanding of the evolving risk landscape. Consequently, the global reinsurance market is in a solid position to support the industry,” says Justin Naylor, CEO at iTOO Special Risks.
“Importantly, the profitability of insurance and reinsurance companies is not a negative but rather a positive trend. When these firms generate profits, they can build up their capacity, reserves and capital, ultimately strengthening their ability to pay out large losses. This is particularly crucial in a world of new and emerging technologies, as well as uncertain risks that are not yet fully understood by the global insurance industry.”
One such example is the rise of artificial intelligence (AI), which poses significant questions about its potential impact on the insurance sector and society at large. As these new technologies continue to evolve, insurers must adapt and develop the expertise to navigate the associated risks and opportunities.
Naylor notes that this uncertainty is compounded by the global political instability witnessed in recent years. The watershed elections of 2024, where many countries saw changes in ruling political majorities, have led to increased political uncertainty around the world.
“This has had a direct impact on insurance risks, such as political violence, terrorism and kidnap and ransom. For example, South Africa experienced significant riots and strikes in 2021, while neighbouring Mozambique has also seen similar unrest,” says Naylor.
“In South Africa, we have observed a growing trend of kidnapping incidents, with more related claims in the past calendar year than any other previous year in our company’s history. This underscores the heightened risk environment, particularly in certain regions of Africa, where technological advancements and political volatility have contributed to an increasingly uncertain landscape.”
The World Economic Forum’s Global Risks Report 2025 rates selected state-based armed conflict as the top risk for 2025, up from eighth place last year. Other major risks for this year listed in the report include extreme weather events, misinformation and disinformation, AI technologies, cyber espionage and warfare and geopolitical recession.
In terms of these emerging risks, iTOO Special Risks is well-positioned and has strong financial standing with good underwriting results and appropriate capital backing. Along with the broader global reinsurance industry, iTOO is in a strong position to support clients through major loss events.
“In 2024, iTOO paid out two losses that exceeded R100 million each. This demonstrates the scale and volatility of the claims we face in our speciality insurance lines. Despite these large payouts, iTOO remains a profitable and stable business, able to respond effectively to such significant losses,” says Naylor.
He states that clients need a strong, expert partner to navigate the evolving landscape. iTOO is a market leader with a strong balance sheet and the backing of the Hollard group, as the company underwrites on the Hollard licence.
“This provides clients with the confidence that iTOO has the financial stability and scale to support them through large, complex and volatile claims. Moreover, iTOO has a 10-year history as a retail brand, demonstrating its expertise and understanding of the specialised insurance market,” says Naylor.
The company’s longevity and track record are important assurances for clients looking for a reliable partner. While the consequences of many new and emerging risks are not yet fully understood, iTOO’s position as a market leader and expert in these speciality areas positions it well to help clients manage the uncertainty.
“Whether it is political instability, technological changes, or other evolving threats, iTOO has the financial strength, global support and specialised knowledge to be the partner of choice. By aligning with iTOO, clients can be confident they are working with the best, most experienced and most stable insurance provider to navigate the complex and volatile risk landscape,” Naylor concludes.