Right before COP 28 is ready to kick-off, Moody’s Investors Service delves into 90 sectors accounting for USD 82 trillion in debt in our rated universe, exploring the potential credit impacts from five major environmental pressures.
Total premium growth is forecast at 2.2% annually on average for the next two years, higher than the average of the past five years, the latest sigma research reads, also emphasizing that there are reasons for optimism in profitability terms. However, geopolitical evolution remains challenging for the global economy.
Insurance markets currently have to cope with growing uncertainty: inflation, geopolitical crises, rising cyber risks, and an increased frequency and severity of natural events, also in Europe where we have seen an unprecedented series of natural catastrophe losses exceeding the 1-billion-euro mark this year. These changes will be at the center of the upcoming renewal discussions, Munich Re stated anticipating the reinsurers’ meeting in Baden Baden.
Digitalization is a source of new growth, new risks and new efficiencies for the insurance industry. Digital value creation has led to an increase of firms' intangible assets, including digital data. At the same time, increased dependency on digital infrastructure makes such assets more vulnerable, for example to business interruption and cyberattacks. In its latest sigma study, "The economics of digitalization in insurance", Swiss Re Institute finds that potential benefits across countries and throughout the insurance value chain are far from exhausted.
To say that the insurance industry is currently changing would be vastly understating the impact of so many new developments and market conditions. Insurance carriers today are confronted by unprecedented change, coming all at once and from a wide range of factors, reads the “Insurance Operations in a Changing Industry
” report issued by Earnix, a global provider of mission-critical, intelligent solutions that are designed to transform how global Insurers and Banks are run.
MOLDASIG S.A., the leader in the insurance market in the Republic of Moldova, is making available for purchase an 80% stake in the company's share capital in a single package of tradable shares on the regulated market of the Republic of Moldova. The purpose of this offering is to strengthen the company's reputation and financial stability.
Weather- and climate-related extremes caused economic losses estimated at EUR 560 billion in the EU between 1980 and 2021, of which only EUR 170 billion (30%) were insured. Nearly 195,000 fatalities have been caused by floods, storms, heat- and coldwaves, forest fires and landslides. Heatwaves caused over 87% of the total number of fatalities from extreme weather events between 1980 and 2021.
As Nat Cat business has become largely loss-making in recent years after many years of soft market, global reinsurers are cutting back on the cover they provide against medium-sized natural catastrophe risks, mostly by tightening T&C, Fitch Ratings says, adding that under the investors’ pressure reinsurers are looking now to other parts of the market showing better profitability.
Secondary perils, namely the natural risks producing small to mid-sized loss events, were initially called so to diferentiate them from the primary perils, those of catastrophic dimensions and nature as earthquakes and huricanes. Nowadays, their cumulated impact became similar to a “Death by a Thousand Cuts” scenario, an article of Moody’s RMS blog reads.
Severe convective storms – storms associated with thunder, lightning, heavy rain, hail, strong winds and sudden temperature changes – caused USD 35 billion, nearly 70% in insured losses worldwide in the 1H 2023. This means that insured losses are almost twice as high in a six-month period as the annual average of the last ten years (USD 18.4 billion), Swiss Re said in a recent article.
According to Global Catastrophe Recap: First Half (1H) of 2023 recently published by Aon, economic losses stemming from global natural disasters are estimated at USD 194 billion. “Notably, this is above the 1H average of USD 128 billion for the 21st century, the fifth highest on record and the highest since 2011”.
The broader market trends seen at January 1 continued at mid-year renewals, but with improved timing and concurrence around terms and conditions. While property pricing saw continued risk-adjusted rate increases in many segments, the average change moderated from January 1, according to reinsurance broker Guy Carpenter, part of Marsh McLennan.
While 1H 2023 is a continuation of the recent run of years with high losses, insured losses continue to account for less than 40% of overall losses, confirming the large insurance gap that persists in many countries for multiple natural hazards. Insurers bore around 35% of worldwide losses in terms of the average half-year losses in the period 2013–2022, Munich Re said.
According to Swiss Re Institute, global insurance premiums, both in non‑life and life, are estimated to grow by 1.1% in 2023 and by 1.7% in 2024. Premium volumes are expected to total a new peak of USD 7.1 trillion in 2023, compared to USD 6.8 trillion in 2022.
Gains in human longevity have tapered off over the last decade but the next wave of improvements is on its way, says Swiss Re's latest report, The future of life expectancy: Forecasting long-term mortality improvement trends for insurance.
Advances in cancer diagnosis and treatment are the most likely areas to improve global longevity, according to the report. Future improvements will need to be supported by addressing older-age health issues such as Alzheimer's, lifestyle factors and access to healthcare.
The Ukrainian Insurance Business Association participated in Insurance Sweden Annual Conference 2023: Crisis and war - what is the role of the insurance industry? Vyacheslav Chernyakhovsky, general director of the association, presented the topic "How do insurance companies handle the challenges of an ongoing war".
Allianz has published its latest Global Insurance Report, analyzing the development of the insurance market in the world. Here, in brief, the report's findings, as summarized in its introductive chapter.
Year-on-year inflation in the OECD as measured by the Consumer Price Index (CPI) fell slightly to 9.2% in January 2023, down from 9.4% in December. Declines in inflation between December 2022 and January 2023 were recorded in half of the OECD countries, compared to two-thirds between November and December 2022. The highest inflation rates were recorded in Hungary, Latvia, Lithuania and Turkiye (all remaining above 20%).
Inflation remains a key concern for European insurance CFOs, followed by a downbeat economic outlook and market volatility in 2023, according to Moody's
annual survey of chief financial officers (CFOs) from 22 leading European insurers.
Challenging times for the automotive industry. From lingering supply chain disruptions to global food shortages and the energy crisis, the economic landscape has been cumbersome, and companies worldwide have had to adapt to this complex new environment.