Global events and geopolitical upheavals, from the COVID-19 pandemic to the US-China trade conflict and Russia-Ukraine war, have propelled the world towards geoeconomic fragmentation. This trend is exemplified by shifts away from free trade and globally integrated supply chains in favour of greater national security and localisation.
Geoeconomic fragmentation has profound impacts for insurers: it threatens multilateral collaboration on global risks such as climate change; it reduces scope for international risk diversification in both underwriting and investment portfolios; it raises operational challenges from diverging laws and regulations. At the same time, it opens opportunities in areas such as political risk and renewable energy insurance.
This report explores the effects of geoeconomic fragmentation for insurers in detail. It lays out three potential scenarios – mild, moderate, and extreme geoeconomic fragmentation – and presents strategies to help insurers maintain resilience and adapt to evolving risks.
