With the US election taking place today, the impact of who will take the White House may seem remote to New Zealand – however, the insurance sector says both Kiwi and global businesses will be watching the outcome with interest.
A recent poll from The New York Times had Democratic candidate Joe Biden winning in a landslide, and predicted that the Republicans would lose four key battleground states – but given the outcome of the 2016 election, nobody is placing any comfortable bets.
University of Otago international relations professor Robert Patman noted that New Zealand has “a huge stake in its international environment,” particularly when it comes to trade and exports, and that the outcome of the election could impact its reliance on multilateral institutions such as the World Trade Organisation (WTO).
“New Zealand and the majority of countries in the world depend on an international rules based system because they’re not big enough to make their own rules,” Patman commented.
“Rules are important for smaller players.”
ICNZ chief executive Tim Grafton says that the insurance sector will be keeping an eye on the outcome, as any kind of global uncertainty is not beneficial to business.
“The risk landscape doesn’t change here in New Zealand, but of course the outcome of the US presidential election is always going to be an important event for businesses and nations around the world,” Grafton said. “The insurance sector will watch with interest.”
“Clearly in the financial sector, you don’t like uncertainty,” he added.
“Uncertainty as to the leadership of the US is not a desirable state to be in for very long, so I think insurers and others in the financial sector – and outside it – will be looking for clarity and certainty after the election.”
Crombie Lockwood central region manager Amanda Halfacree said that global insurance players will certainly be invested in the outcome, and, specifically, what it will do to the financial markets. She said that investment returns have been relatively poor for the insurance sector over the past year, and that a more significant dip could have further consequences.
“It really depends on how things are perceived in the United States,” she commented.
“The biggest question is whether investors believe that they’re going to get more out of Donald Trump or Joe Biden, and what matters in New Zealand is going to be how global insurers and reinsurers are affected.”
“In the short-term, that’s really going to be a matter of whether or not there are investment returns – which at the moment are incredibly poor,” she explained. “In the longer term, we obviously have issues of climate change and environmental protection which may trickle down to us in the interim.”
Halfacree says the global insurance space is feeling the brunt of its investment losses, and any further instability in the market is only going to strengthen the blow.
“Certainly in the short term, the insurers and reinsurers are suffering because of losses, and because of their inability to get normal or significant investment returns,” she said.
“If there is instability in the US and that translates to instability or another crash in the market, then that is going to poorly affect things.”
So far over 91 million Americans have cast early votes, representing about 67% of registered voters nationwide.
