As trade risks increase and political uncertainty abounds, experts are convinced that we are entering a ‘new normal’: the term is used liberally by the people we speak to throughout this publication.
As geopolitics has played out through various elections in the last year, the subsequent increased uncertainty has probably encouraged a greater appreciation of political risk and trade credit insurance. Although the increased complexity of the market and a growing number of trade barriers are detrimental to economic growth, it’s a situation that credit insurers can use to their advantage. “Increasing corporate insolvencies and non-payment events could result in increasing demand for credit insurance,” reads a release issued by the Berne Union in May.
The latest statistics from the Berne Union show that members collectively insured US$1.9tn of exports and foreign investments in 2016 – equivalent to 11% of total world trade, and a slight increase from US$1.86 in 2015. The statistics “confirm a continued risk appetite from credit insurers, despite a difficult economic period that has seen claims peak in the past couple of years” (US$5.4bn in 2016 and US$6bn in 2015), says the Berne Union.
At the organisation’s spring meeting in Copenhagen earlier this year, members indicated that business volumes for 2017 show even more signs of growth compared to 2016 levels, and despite the high claims, they continue to be comfortable with the risks they are taking on. In this, our fifth annual publication dedicated to all things insurance, we take a closer look at some of these and other issues affecting the business today.
Our regional focus is on the Americas, where we find that insurers are using the current uncertain environment to try and seek greater market penetration. Elsewhere, we drill down into the details of the Insurance Act 2015, which came into effect in August last year, and which many argue is what 2016 will be remembered for.
Our political risk report examines how rising populism is threatening more protectionist trade policies and currency volatility – and driving demand for cover.
In a roundtable write-up, we scrutinise the use of surety for banks, and to this end hosted a face-to-face discussion to analyse feedback from banks and underwriters involved in the business.
In keeping with wider market trends, we also investigate how technology is impacting the insurance market, and our writer questions whether the likes of blockchain, smart contracts and the internet of things could make the industry completely automated.
We understand that some of the instances we reference will most certainly transform in the coming year: it’ll be interesting to monitor how the various forecasts from quoted industry specialists pan out.
Populism and political risk insurance
Blockchain and the insurance industry
ECAs jostle for position
An overview of Insurance Act 2015
Non-payment insurance policies
Leaders in Trade Q&A
Arthur J. Gallagher: credit & political risk insurance market update