Global reinsurer Swiss Re has released the first issue of its new Economic Insights, with the report titled Protectionism on the rise, and here to stay.
The report highlights the ongoing rise of trade protectionism around the world, in particular noting the “America first” approach taken since the election of Donald Trump in 2016. The decade-long period of falling tariffs appears to be drawing to an end, with Global Trade Alert recording more than 10,000 state protectionist interventions between November 2008 and 2017.
However, the report also notes that tariff trade barriers were on the rise for a number of years prior, citing the global financial crisis of 2008-09 as a significant cause. Since these events, many have attempted to address rising inequality and globalisation via “stealth protectionism,” rather than directly through tariffs.
“What is new is a move to bi-polar and regional trade arrangements from multi-lateral agreements,” states the report.
For insurers, the rise of protectionism could present a number of additional challenges, particularly around marine insurance – the report suggests that a “trade war” would be an undesirable situation for the industry.
While IUMI reported earlier this month that there was a 2% rise in marine insurance premiums globally, there are still serious challenges facing the industry. As IUMI noted, cargo and hull present a number of issues; unprecedented nat-cat and outlier event losses, along with falling vessel values and other market conditions, have all contributed to a riskier environment for insurers, even in light of an upwards turn in the market.
Increased protectionism could potentially cause additional issues on top of these existing challenges.
“This poses challenges for international re/insurers by making cross-border transactions more costly and reduces the benefits of diversification of global companies, with detrimental implications for re/insurers’ ability to close protection gaps,” the report notes.
The report describes the current impact of higher tariffs on insurers as “negligible”. However, it also suggests that international regulation will be more fragmented if the shift from multilateral trade agreements to bilateral trade agreements continues.
