A recent report by Ernst & Young (EY) showed that insurers around the world are reassessing their strategies in light of the escalating risks associated with climate change, cyber attacks and geopolitical tensions, considering that "operational flexibility" has become a key focus in their future strategies.
And according to the report, which came within the global outlook for the insurance sector for 2026, the nature of the risks facing the sector has become more complex, interconnected and difficult to predict, as extreme weather events, cyber attacks and geopolitical tensions are no longer separate events, but rather overlapping factors that constantly reshape the work environment of insurance companies.
And while managing uncertainty has always been an essential part of the insurance industry, the current phase presents a different challenge, given the rapid evolution of risk and its interaction with each other across markets and value chains, reducing the effectiveness of traditional methods of risk assessment.
And the concept of resilience is no longer just a precautionary measure, he said, but has become a “strategic capability” built into companies’ core operations, allowing them to withstand ongoing disruptions rather than respond to crises separately.
And digital transformation has become a critical factor in supporting this trend, not only in terms of raising operational efficiency, but also to promote growth, innovation and resilience. And he warned that companies that do not update their technology systems may decline competitiveness as customer expectations change and competition intensifies, especially from non-traditional players entering the market.
The report also highlighted the challenges associated with the continued reliance on legacy technology systems, which are often characterized by fragmented data and complex operational architecture, limiting the ability of companies to respond quickly or expand their services efficiently.
And he called for simplifying systems, improving data management, and adopting integrated platforms that provide real-time analytics, which contribute to improving the customer experience, accelerating product development, and raising the efficiency of operations.
And with regard to artificial intelligence, the report pointed out that although it has started to be used in some applications such as chatbots and process automation, its impact is still limited, stressing that the true value of this technology will only be achieved when integrated into basic operations such as underwriting, claims management and customer interaction, which requires updating the data infrastructure and redesigning operations.
The report also addressed regulatory developments, citing the European Union's Digital Operational Resilience Regulation (DORA), which requires insurers to demonstrate their ability to cope with disruptions such as cyber attacks or breakdowns of external service providers.
In addition, the report stressed that institutional culture and human capital are essential elements in the success of the transformation, in light of the competition for specialized competencies in the fields of artificial intelligence, data analysis and cybersecurity, and the need to develop the skills of current employees.
Despite the challenges, the report noted that the current environment creates new opportunities for companies that are able to adapt, by investing in modern systems, adopting technology strategically and enhancing internal capabilities.
Uncertainty, despite the pressures, has become a major driver of the reconfiguration of the insurance sector, the report concluded, suggesting that companies that are more adaptable and incorporate flexibility into their operating structure will be better able to achieve a competitive advantage in the future.
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