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Protectionism is here to stay : the insurance will suffer, says Swiss Re

by

Hubert Roy

11 October 2018 11:30

Photo : Freepik

For the reinsurer Swiss Re, protectionism is on the rise. Although these effects on the insurance industry are negligible at this time, the situation is bound to change.

In a note written at the end of September, and of which the of the insurance Journal has obtained a copy, Finn Krüger, senior economist at Swiss Re, believes that a recession may be the result of a possible escalation of tariffs. Between November 2008 and December 2017, Swiss Re said it had documented 10, 000 operations protectionist in the economic markets. Conversely, during this period, 3 000 measures of market liberalization have been adopted.

Swiss Re estimated that 30 % chance of a trade war to occur, combined with a slowdown of the economic growth. The reinsurer is expected that such a scenario would have long term effects on the insurance industry, the main one being a slowing of the overall growth in insurance premiums.

Two markets at risk

Two markets will be affected more than the other in the event of a trade war, believes Swiss Re. In marine insurance, is the commerce by way of the seas, the reinsurer expects a decline of 1 % of trade cause a reduction of the order of 0.89 % of the premium volume of the market of cargo and 0.8% of the insurance of the hulls of boats, which, as in automobile insurance, covers damage to the vessels.

The second market, for which Swiss Re provides for a marked slowdown is that of trade credit. He anticipates a decline of 1 % of the trade will lead to a reduction in the premiums of 0.67 %.

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