Geopolitics in Insurance – Thematic Intelligence

Geopolitics in Insurance Thematic Report Overview

The Russia – Ukraine war, supply chain disruptions caused due to growing geopolitical tensions, and rising civil unrest due to poor global economic scenario are some of the factors that are likely to put increased pressure on insurers line of business.

For instance, Russia’s invasion of Ukraine will have further ramifications for insurers. Estimates suggest these losses could be as high as more than $19 billion for the industry. As companies look to engage in reshoring or freindshoring away from China, supply chains will inevitably be affected by the drastic changes. Additionally, the implications of geopolitical tensions around major shipping passages (such as the Strait of Malacca, the Suez Canal, and Bab-el-Mandab) will impact the marine and transit lines of business.

The Geopolitics in Insurance thematic intelligence report determines how political risk and political violence are increasing across the world. It also analyzes how insurers can mitigate against them, providing vital cover for international businesses. It also provides the main trends shaping the geopolitics in insurance theme over the next 12 to 24 months.

Geopolitics in Insurance – Key Trends

The main trends shaping the geopolitics in insurance theme over the next 12 to 24 months are technology trends, macroeconomic trends, and regulatory trends.

• Technology trends: Some of the key technology trends impacting the geopolitics in insurance theme are the rising use of AI, the focus on cyber insurance and cybersecurity, and digitalization. A country’s technological prowess of the future will chiefly be dictated by its AI capabilities. Indeed, one of the key stress points in US-China relations surrounds the use and development of AI tools. China aims to be a world leader in AI by 2030 and is heavily investing to make it happen.
• Macroeconomic trends: The key macroeconomic trends explained in the report are the cost-of-living crisis, economic slowdown, and rising debt crises among others. For instance, With interest rates rising across the world, has led to high servicing costs for many debtors, triggering concerns about the ability of many to repay their debts and leverage in the global financial system.
• Regulatory trends: Economic sanctions, The Paris Agreement and the Net-Zero Insurance Alliance, and the focus on data protection regulations are a part of the regulatory trends impacting the geopolitics in insurance. For instance, a key aspect of Western foreign policy over the past decade has been the use of economic sanctions and trade restrictions against hostile states. These sanctions have been broadly met with disapproval from both targeted countries and other emerging economies.

Geopolitics in Insurance – Industry Analysis

Terrorism remains a threat to organizations both domestically and internationally. Understanding this risk is becoming a key challenge for insurers, especially as many players look to restrict coverage for such events in all-risk property policies. Clients are led to purchase standalone cover, which is also becoming increasingly difficult in some major US cities as insurers cut cover in some zip codes. While the risk of terrorism in several European countries has fallen over the past five years, the evolution of the threat makes it arguably harder to track.

The Geopolitics in the Insurance industry analysis also covers:

• Timeline
• Company filing trends
• Social media trends

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Geopolitics in Insurance – Value Chain

The idea for a new insurance product is developed during the product creation stage of the insurance value chain. Product development, marketing & distribution, underwriting, and risk profiling, claims management and customer service are the key components of the insurance value chain.

Product Development: Brokers, insurers, and regulators all have a big part to play in this period. Because of their interactions with clients, brokers have significant knowledge of what customers require. If enough people request this type of cover, brokers will most likely provide it. However, in some circumstances, the insurance policies that are currently on the market may not be able to meet these needs. Regulators may have an impact on the development of a product by making it necessary (as with motor insurance) or by putting restrictions on the specifics of the cover. Insurers are solely responsible for the development of these products.

The Insurance Value Chain

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Insurance Companies

Some of the leading players associated with the theme:

• AIG
• Allianz
• Aon
• AXA
• Chubb

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Non-life Insurance Sector Scorecard

At GlobalData, we use a scorecard approach to predict tomorrow’s leading companies within each sector. Our sector scorecard has three screens: a thematic screen, a valuation screen, and a risk screen.

• The thematic screen ranks companies based on overall leadership in the 10 themes that matter most to their industry, generating a leading indicator of future performance.
• The valuation screen ranks our universe of companies within a sector based on selected valuation metrics.

• The risk screen ranks companies within a particular sector based on overall investment risk.

Non-life Insurance Sector Scorecard – Thematic Screen

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Scope

• Russia’s invasion of Ukraine will be highly costly to insurers. Estimates suggest losses could be as high as $20 billion for the industry.
• The past few years have seen considerable damage caused by political violence. For example, Allianz Global Corporate and Specialty cites $1.3 billion in losses caused by damage to infrastructure and lost output in Peru during protests in 2022.
• The effects and costs of climate change are tangible. Swiss Re estimates that 2022 saw $115 billion in insured losses globally.

Key Highlights

• Russia’s invasion of Ukraine will be highly costly to insurers.
• The past few years have seen considerable damage caused by political violence. For example, Allianz Global Corporate and Specialty cites more than $1 billion in losses caused by damage to infrastructure and lost output in Peru during protests in 2022.
• The effects and costs of climate change are tangible.

Reasons to Buy

• Understand the relationships between the world’s current major and upcoming geopolitical powers.
• Determine how political risk and political violence are increasing across the world and how insurers can mitigate against them, providing vital cover for international businesses.
• See how economic, social, and political factors are coalescing into a difficult period across the world.
• Formulate strategies for overcoming these challenges in areas across the insurance value chain.