Are insurance companies making the best use of investment arbitration?

This article was originally published on Global Arbitration Review, December 2025.

The idea of insurance is almost as old as commerce itself, with some forms of insurance dating back to prehistory. Today, the largest insurance companies rank among the biggest corporate organisations in the world, with ten companies in the world’s top 100 largest public companies (ranked by Forbes). According to the International Association of Insurance Supervisors’ latest Market Report, the global insurance sector exceeded €7,000 billion in gross written premiums in 2024, and it is continuing to expand, especially in emerging markets where there is impressive average annual growth of over 8%. Insurance is an integral part of all projects involving international investment, all the more where significant risk is involved.

Yet despite this, public data suggests that historical numbers of investor-state cases brought by insurers are low compared to other industries. According to UNCTAD, out of over 1,300 ISDS cases filed since 1987, only 23 (less than 2%) have involved the insurance sector (including insurance, reinsurance and pension funding), with the statistics dominated by matters in the energy and extractive industries sectors. 

This article considers what lies behind those figures and the wider relationship between insurers and investment arbitration.

Insurers as protected investors

There are different ways in which an insurer can be said to be investing internationally.  

First, in a standard form of international investment, insurers carry out foreign investment by establishing a subsidiary or branch in a host state to sell insurance products. In such a case, the insurer could be expected to fulfil typical definitions of investor and investment. For instance, in Continental Casualty v Argentina, the tribunal confirmed that a US insurer’s local entity established in Argentina constituted an investment under the US–Argentina BIT, and as such, the impact on that investment of state measures devaluing the local currency were considered.

Second, and more specific to the insurance market, insurers sell insurance products to investors that are themselves making investments internationally. The insurer takes on risk in terms of being potentially liable up to the limits of the insurance policy. The question of investment here could be more nuanced and may depend on the wording of the specific treaty as well as the characteristics of the policy. Cases accepting financial activity as investments can be considered by analogy. In Fireman’s Fund Insurance Company v Mexico, the tribunal upheld jurisdiction in a matter relating to an insurer’s debentures, finding that they fell under the NAFTA treaty’s chapter on investments, rather than the chapter on financial services as the respondent had alleged. 

Low reliance on investor-state mechanisms

Low investor-state case numbers are likely the result of several factors linked to the nature of both the industry and also the insurers themselves.

Regarding local operations, an insurance company’s local subsidiary may not be involved in the most significant projects, which depend on significant capital backing and as such the policies are more likely to be handled out of convenient major jurisdictions. Even if such subsidiaries are affected by state measures, the kinds of losses caused may not be sufficient to lead to treaty cases. Most significant international projects are insured through a tower of different insurance policies, with liability shared amongst insurers, introducing complexities of different nationalities, and in all cases reducing the individual liability and therefore losses of each actor involved. Further, insurance subsidiaries may simply be less susceptible to one-off decisions of governments than, say, a construction or mining project. Insurance is a highly regulated industry, so there could of course be disputes with regulators (related, for example, to solvency requirements, price controls or capital adequacy) but these may be more nuanced and less likely to result in the kind of sudden or extreme loss that can encourage an investor to bring a treaty claim. 

Further, the length, cost and uncertainty of treaty arbitration against a state may have led insurance companies, by nature focused on predictable risk management, to prioritise local remedies through regulators or state courts, or simply the use of their own insurance policies so that risk is spread in the event of damaging state measures.

Insurers’ increasing presence in investment arbitration

There are signs however that investment disputes involving insurers may be on the increase. 

First, insurers may bring investor-state cases themselves. As the rapid growth of insurance in emerging markets continues, in each state where they are doing business, insurance companies need to go through the relevant licensing requirements, comply with capital and solvency obligations and respect all regulations, such as local consumer protection or tax and accounting obligations. In all these aspects, they are open to the impact of state measures.  

Since 2020, at least five disputes have been reported as having been brought by insurers. While these are all pending, they appear from reports to have arisen out of relatively typical alleged fact situations for investor-state disputes. These include the nationalisation of the pension system in Bolivia (Zurich Insurance Company v Bolivia), foreign exchange restrictions in Venezuela (Liberty Seguros v Venezuela (II)), a revoked licence to sell insurance products in Romania (Eurohold Bulgaria v Romania) and tax measures applying specifically to insurance companies in Mexico (AXA v Mexico, Allianz v Mexico). Cases such as these suggest there may be a gradually changing attitude on the part of insurers, which may become more mindful of investor protection when carrying out international work, or simply more ready to take legal action to preserve rights. 

Second, political risk insurance (PRI) may provide another way in which insurers have a role to play in investor-state cases. PRI is a protective mechanism for international investors that may be triggered in the event of geopolitical events. The market has grown substantially in recent years, more than tripling from 2010 to 2024 according to UNCTAD and now representing a market of premiums in the region of US$5 billion. 

PRI and investment treaty protection are not mutually exclusive. The wording of the PRI policy will determine its scope, which may be narrower than recourse under a treaty, and as such they may operate as complementary layers of protection. Both the insured investor and the insurer may share an interest in investment arbitration, with the insurer seeking reimbursement from the state of sums paid to the insured under the policy, while the investor pursues recovery that goes beyond the contractual limits of the policy. There may be cases where the insurer is subrogated to the rights of the insured against the state and the insurer can then pursue the claim (as took place in OPIC Karimun Corp v Venezuela, although this was in specific circumstances relating to the nature of OPIC), but even where the insurer may not have formal standing to participate they may still play a role and stand to benefit in the event of a successful claim.

Ultimately, whether we see major cases brought by insurers for treaty breaches such as expropriation remains to be seen, and will depend on the actions of states as much as the attitude of insurers themselves, but it would appear that market forces are leading insurers to rely on investor-state recourse, and as such the number of cases are only likely to increase.