Re/insurers will retain strength despite economic instability

Re/insurers demonstrated their ability to continue to underwrite risks and pay claims in a timely and professional manner despite the most recent convulsions in the global economy—and this will continue. That is the opinion of Robert Hartwig, president and economist, Insurance Information Institute (III), who said that the economic and financial market instability during the summer of 2015 again demonstrated the resilience of the industry.

“The past few months bore witness to what was but the latest act in the Greek debt drama that began in 2009 and by 2012 had sucked in several other nations around the Eurozone’s periphery,” he said.

“Just as Greece’s problems resurfaced in 2015, China, the world’s second largest economy, began to grapple with a sharp economic slowdown and collapse of its stock markets. “These factors alone were sufficient to elevate the level of global economic uncertainty, but it was China’s surprise decision in August to devalue the yuan that sent shockwaves throughout global financial markets.

“The yuan’s devaluation amplified volatility in the very same markets that were attempting to adjust to the possibility of the US Federal Reserve’s first rate increase since 2006.” But Hartwig said that despite the sharp intensification of global economic and financial market instability in 2015, global insurers and reinsurers once again demonstrated that their ability to underwrite risks and pay claims was in no way impaired by the most recent upheaval in the global economy.

“Their core operating model remained fully operational, as was the case during the global financial crisis several years ago,” he said. Hartwig added that while the industry will face further challenges, he believes that the stability and strength of the market will remain intact.

“No doubt additional challenges will abound—the potential exits of Britain from the EU and Greece from the Eurozone, economic weakness in China and interest uncertainty in the US.

“That said, the stability and financial strength of the global insurance industry will remain intact and poised for growth,” he said.