ZURICH, 15 January 2024 – The global economy is shifting from integration to fragmentation as nations prioritise security over efficiency. A new research report by the Geneva Association, Insurance in a Fragmented World Economy, explores the implications of reduced globalisation, or ‘slowbalisation’, for re/insurers and strategies for companies to adapt to evolving risks.
The report highlights the disruptive potential of geoeconomic fragmentation on global risk management: it weakens multilateral collaboration on global risks such as climate change; narrows opportunities for risk diversification in both underwriting and investments; and creates operational hurdles from divergent regulations. The report also identifies growth opportunities for re/insurers in areas such as political risk and renewable energy insurance.
The Geneva Association’s report lays out three potential scenarios – mild, moderate and extreme geoeconomic fragmentation – and presents strategies for insurers to strategically respond to each one.
Jad Ariss, Managing Director of the Geneva Association, said: “The tides of globalisation are shifting, with geo-economic fragmentation posing both challenges and opportunities for the insurance sector. Insurers must navigate rising volatility, restricted diversification, and harder-to-mitigate global risks, while seizing growth opportunities. Our report provides actionable strategies for insurance companies to thrive amid this evolving landscape.”
Kai-Uwe Schanz, Director Macro & Geoeconomic Shifts at the Geneva Association and author of the report, said: “Geoeconomic fragmentation signals a shift toward national security and resilience over economic efficiency, disrupting free trade and globally integrated supply chains. While full-scale deglobalisation remains improbable, insurers face rising challenges – from greater exposure to climate and cybersecurity risks to less scope for diversification in underwriting and investment management. Strategic agility will be key to managing volatility and unlocking new opportunities in this evolving environment.”
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