Economic Update 2021 : Pandemic rebound has further to run

Date: Monday, November 1st, 2021 by Michaela Hickson.

The green shoots of economic recovery from the pandemic are visible on the horizon; yet multiple challenges remain for the global economy. The current global energy crisis, climate change
vulnerabilities, supply chain bottlenecks and high inflation look likely to derail a strong bounce back.

The insurance industry, as with almost all others, is grappling with the changes brought about by the pandemic and faltering economic growth could provide yet another challenge. Considering this, we have worked together with Capital Economics to look at current economic trends to provide our members and their clients a broad view of the global economy towards shaping their planning for the months ahead.

Recent discussions with our members have highlighted how across the globe, demand for insurance varies by line of business. However, as economies transition to the ‘new normal’, we are likely to see growth in those classes of insurance that had fallen in the last two years.

We have seen that many claims brought are pandemic related, as businesses try to recoup losses that have been made during lockdown periods and beyond. However, we are now also seeing a significant number of claims for natural disasters across the world as floods, storms and wildfires continue to increase due to the effects of climate change.

M&A activity within the insurance market has increased in many regions, as insurers seek to provide a full-scale offering or upgrade their technology to offer their consumers a more streamlined service. In addition, there is also a greater demand for increased transparency and competitiveness, coupled with tougher regulatory regimes. All of this is critical to our clients’ working lives. Macroeconomics now, more than ever, impacts every aspect of the insurance value chain.

I want to thank Capital Economics for their insightful economic commentary which forms the backbone of what I am hoping will prove to be a useful tool for our members and their clients.

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