Insurance will be key in fostering resilience as renewable energy adoption accelerates, global supply chains change and food security becomes a priority, according to a report by Swiss Re Sigma.
“Six months after the start of the war in Ukraine, our world has changed dramatically,” says Jerome Haegeli, Chief Economist at Swiss Re Group.
“Triggered by war and the pandemic, we are moving from an interconnected to a multipolar world confronted with disrupted supply chains, energy and food crises.”
Insurance is becoming increasingly important to the economy, contributing to financial stability by covering risks in the supply chain, while also facilitating the transition to a green economy by insuring and investing in renewable energy, and contributing to global food security by expanding agricultural insurance can , he says.
Covid-related disruptions and the war in Ukraine have prompted companies to consider repatriating parts of their supply chains to home markets, while interest in “friend shoring” focuses on countries where the Relationships are less strained, has also increased.
According to Swiss Re, reshoring is expected to generate an additional US$30 billion (US$43.8 billion) in global commercial insurance premiums over the next five years, primarily from engineering, property and liability insurance.
Friend shoring would add $3 billion (US$4.4 billion) in rewards. Shipping and trade credit premiums would fall slightly as global trade is expected to slow.
The invasion of Ukraine has added even more urgency to the already-initiated shift to renewable energy in response to climate change.
Swiss Re says in the report Preserving Resilience: The Role of P&C Insurers in a New World Order, the insurance industry can support the transition by providing cover for the complex risks inherent in building and operating renewable energy infrastructure are connected.
The report also says that supply chain disruptions and the crisis in Ukraine have pushed up food prices, while droughts and heavy rains have caused crop failures in key farming countries.
According to Swiss Re, climate change risks will increase, and despite challenges in expanding insurance coverage from both a supply and demand perspective, global agricultural premiums are expected to grow to US$80 billion (US$116.9 billion) by 2030 , from US$46 billion (US$67 billion). billion) in 2020.
“Overall penetration remains low, particularly in emerging markets,” it said. “We see public-private partnerships as a powerful tool to expand insurance reach.”