Page 14 - Turkinsurance Digital Magazine

14 cover story

The new risk of insurance; inflation

Swiss Re has released its regular Sigma report. According to the report, economic

slowdown, high inflation, and geopolitical uncertainties are putting pressure on the
insurance sector. The report emphasizes that inflation continues to be the biggest risk for
insurers and predicts that total global premiums will grow below the respective trends of

1.1% and 1.7% in real terms in 2023-2024. Digital technology has revolutionised value
creation. Today, “intangible assets”, including digital data, constitute a significant share
of economic value and are the source new risk pools.

More to come Intangible risks

Digitalisation is also enabling significant operational efficiencies. The ongoing expansion of digital ecosystems present business in-
Even so, and rather like the productivity paradox that has afflicted terruption and cyber risk pool opportunities. For example, we es-
the global economy over the last 20 years, the full transforma- timate that the global cyber insurance market has grown by 60%
tive impact of digital technology on the insurance industry remains over the last two years, and we forecast a more than 50% gain
pending. Our new Insurance Digitalisation Index affirms this state over the coming five years.
of play, indicating that in no country have insurers exhausted the
economic potential of digital technology. There’s more to come.

The index suggests that advanced markets with relatively strong
physical infrastructure and where more people have access to the
internet, have made most progress in digitalising their insurance
sectors. Emerging markets have most catch-up potential and over
the last 10 years, they have been doing so, fast. Notably, this
sigma finds a correlation such that economies which
are more digital are typically more resilient to other
exposures like natural catastrophes.

Intangibles and new risk pools

Digitalisation has fundamentally reshaped the cor-
porate sector. As firms have shifted from producing
physical goods to providing information and services,
the composition of their balance sheets has
changed too. The so-called intangible assets
represent a main growth opportunity for the
insurance industry. The global value of intan-
gibles of listed companies has increased five-
fold over the last 20 years, and close to 80%
of that value is uninsured.