Swiss Re predicts that deglobalization will generate $33 billion in new commercial property/accident insurance premiums by 2026, according to the latest sigma report, “Maintaining Resilience: The Role of Non-Life Insurers in a New World Order.”
The restructuring of the supply chain is expected to lead to investments in new infrastructure and production facilities, increasing demand for technical insurance. Relocating manufacturing capacity domestically is expected to generate $30 billion in global commercial insurance premiums by 2026, primarily from technical, property and liability coverage. “Friend-shoring” from supply chains to allied countries would add another $3 billion in premiums, Swiss Re said. Marine and trade credit premiums should, however, decline slightly as global trade is expected to slow down.
“Six months after the war in Ukraine, our world has changed dramatically. Triggered by the war and the pandemic, we are shifting from an interconnected to a multipolar world facing disrupted supply chains, energy and food crises,” said Jérôme Haegeli, group chief economist at Swiss Re, in a statement.
“Insurance is becoming even more important to the economy and contributes to the financial stability of companies by hedging supply chain risks,” he said. “Industry can also facilitate the transition to a green economy by insuring and investing in renewable energy infrastructure, and expanding agricultural insurance can contribute to global food security.”
Gianfranco Lot, Head of Global Reinsurance at Swiss Re, said: “In the changing risk landscape, commercial property and casualty insurance will continue to be a mainstay of resilience, for example helping companies maintain financial stability as business conditions change, providing solutions to to help reduce cash flow volatility and stabilize revenues while realigning supply chains.”
Other findings from the sigma study:
- If countries realize the full renewable energy capacity they are targeting so far, the Swiss Re Institute estimates that these investments will generate additional premiums from the energy sector of $237 billion by 2035.
- Farm insurance appears to play a key role in helping farmers maintain their incomes and continue farming despite crop losses due to drought and heavy rainfall. Global agricultural insurance premiums are expected to nearly double to $80 billion by 2030.
- In terms of economic growth, the US, UK and Germany will benefit most from production reshoring, Swiss Re found, while countries like Vietnam and Mexico could benefit from friendshoring.
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