Growing divisions between economic blocs and potential restrictions on capital flows could limit risk diversification, raise insurance costs and make some peak risks uninsurable, according to a new report published by the Swiss Re Institute and Brokerslink.
The report, Underwriting a Fractured World, also suggests that political fragmentation could reduce cooperation on climate change, pandemics and cyber threats, leaving society to bear the cost through lower coverage and wider protection gaps.
Further, the data suggests that US trade tariffs are likely to have limited short-term effects on premiums, but longer-term structural impacts from geoeconomic fragmentation pose a greater challenge. Swiss Re estimates a US effective tariff rate of 15% could cut global property and casualty premium growth by around 0.7 percentage points and life premium growth by 1.2 percentage points between 2025 and 2027 compared with 2024 levels. Inflation from higher import costs is expected to drive up US claims in property and motor insurance, while outside the US effects are likely to remain contained, and in Europe may moderate inflation rates.
Rising global uncertainty is boosting demand for insurance, with cyber coverage expected to see double-digit growth due to geopolitical tensions and growing digital exposure through AI. Re-industrialisation and the energy transition are also likely to create strong demand for commercial and specialty insurance.
José Manuel Fonseca, president and CEO of Brokerslink, commented: “This excellent report from Swiss Re Institute offers a new and compelling view of both the challenges and opportunities facing the insurance industry in today’s increasingly fractured world. The insights are a testament to Swiss Re’s analytical depth and expertise and I would like to thank them for partnering with us to deliver such valuable perspectives at our global conference.”
Source: cirmagazin.com
