Uncertainty in financial markets and in the international business world as a result of Donald Trump’s presidency and Brexit could lead to an increased demand for political risk insurance cover, something Lloyd’s of London’s Inga Beale highlights as a potential opportunity.
As reported by Bloomberg here, Beale spoke in an interview in Miami on Tuesday and said that uncertainty created by the political climate changes thanks to Trump’s election and the UK’s Brexit vote, could both add to a desire for greater insurance coverage to protect against political and trade issues.
“I wouldn’t be surprised if we start seeing much more political-risk insurance being bought all over the place,” Bloomberg quotes Beale from the interview, adding that because Lloyd’s is such a specialist insurance and reinsurance market which provides political risk among many other covers, “You could say that could be seen as an opportunity.”
Interest in coverage to protect businesses against trade restrictions, political protectionism, new tax rules and other global issues that could crop up in this less stable political climate, has been on the rise in the last year, as businesses have digested the ramifications of the changing landscape.
Any uptick in demand for classes of business such as political risk cover would be welcomed by under-pressure insurers, although we understand that some of the major reinsurance firms have been offering political risk coverage alongside their direct corporate offerings.
Reinsurance firms, such as Munich Re and Swiss Re, have been creating closer relationships with major global corporations in recent years, as they increasingly put capacity to work in complex, tailored solutions for large insurance buyers.
It would be natural for these global players to take advantage of any opportunity to offer an additional class of business, should demand emerge, so no matter how specialised the Lloyd’s underwriting market can be on issues such as political risk, it likely won’t be the only provider looking to solve businesses political risk problems should this anticipated new demand for coverage emerge.