The London Market is preparing for a year of evolving risk landscapes and regulatory scrutiny, according to the International Underwriting Association (IUA).
Chief executive Chris Jones (pictured, left) highlighted the rise of cross-class business issues, as insurers grapple with risks that span multiple sectors. Cyber threats, artificial intelligence, climate change and intangible assets are increasingly challenging traditional line-of-business underwriting models.
Technology is reshaping the market, with AI-driven predictive models, parametric triggers, and algorithmic underwriting becoming central to client solutions. While these innovations offer new opportunities, they also require insurers to adapt to risks faster than conventional models can predict.
Meanwhile, regulatory developments will intensify in 2026. According to Nafisah Hussain (pictured, centre), acting director of public policy of the IUA, the Prudential Regulation Authority's (PRA) Dynamic General Insurance Stress Test (DyGIST) in Q2 will involve many IUA members, while the Financial Conduct Authority (FCA) reviews the scope of its Consumer Duty, the Senior Managers & Certification Regime (SMCR), and climate risk rules.
The UK is also introducing a new captive insurance regime, alongside PRA requirements for climate risk governance and solvent exit planning, and FCA rules on non-financial misconduct. The IUA will advocate for proportionate regulation that distinguishes between consumer and business risks.
Market conditions will continue to pressure growth, rate adequacy and profitability. IUA director of underwriting Tom Hughes (pictured, right) said insurers must monitor geopolitical unrest, climate extremes, cyber threats, AI-related exposures and fast-moving litigation trends.
The IUA plans to publish research on protection gaps for emerging risks, including PFAS (per- and polyfluoroalkyl substances) and their implications for pollution coverage.
Claims functions are also expected to take on a more strategic role, influencing policy wording and best practices. Talent recruitment, development, and integration of new technologies are key priorities for claims teams, with initiatives underway to strengthen career pathways in London Market claims handling.
Operational transformation will also continue, with the Velonetic services refresh under the Blueprint programme and broader adoption of market-wide data standards. Education, training, and workflow integration are expected to remain central to maximising the benefits of these changes.
Despite the challenges, the IUA said disciplined, innovative insurers that embrace cross-class solutions, emerging risk monitoring, and technology-driven underwriting are well-positioned to lead the market in 2026.
