Russia’s invasion of Ukraine has ‘dashed’ hopes for a bumper year for the insurance industry, says a new report from Allianz.
The Allianz Global Insurance Report 2022 says that this year was expected to be ‘another bumper year’ for the insurance industry, but this was lain to waste by Russia’s invasion of Ukraine.
As a result, the firm said that premium income will grow by around 1pp slower than was originally assumed.
It wrote: “Overall, we now expect global premium income to grow by +4.8% in 2022, with life and p&c developing almost in step (+4.9% and +4.6% respectively). This figure must be considered against the backdrop of a global inflation rate of 6.2% this year.”
The war against Ukraine will also have far-reaching consequences for the global risk landscape, said Allianz.
Elsewhere in the report, it wrote: “For developing and emerging countries, Covid-19 was already a hard blow. Inadequate vaccination campaigns and soaring debt have left them extremely vulnerable. The Ukraine war, with its fatal consequences for energy and food prices, is the next blow. The economic, political and social consequences are likely to weigh on the development of these markets for years to come.”
It added: “As the global division of labour is reorganized, the role of emerging markets is likely to shrink: The era of the emerging global middle class as a reliable growth driver might be over. On the other hand, the reconfiguration of international supply chains offers new opportunities as this process, at its core, is nothing but “applied risk management” – the core competence of insurers. It will accelerate the shift from a pure product logic to a more service-oriented business model.”
However, the firm said it was not pessimistic about the near future, saying that uncertainties are the ‘breeding ground for rising risk awareness’ and reinforce the impact of climate and demographic change, the main drivers of growth for risk protection.