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Global economy is on the verge of 'seismic change'

Chartered Insurance Institute | Chartered Insurance Institute

2 min read Partner content

Our global economy is on the verge of seismic change, but what path will it take and is the insurance industry well equipped to stay one step ahead of future challenges, asks a new report.

The report, entitled, 'Future risk: Social and economic challenges for tomorrow', published by the Chartered Insurance Institute (CII), draws on expert opinion to predict three possible scenarios for the future.

Expert opinion is provided by, David Smith of the Sunday Times, George Magnus of UBS, Dr Uri Dadush of the Carnegie Endowment for International Peace, Andrew Leung, Independent Consultant and China Specialist and Laurence Whitehead of Oxford Analytica.

Each expert submitted essays on topics ranging from how the UK can maintain a comparative advantage in a shifting global economic order, to the future direction of Chinese monetary policy.

The first scenario named 'upside', sees a resurgent West and a thriving East, where countries work together to solve the world's socio economic problems.

In this scenario Western insurers are deemed to remain highly competitive, albeit with increasing pressure from Asian providers.

The 'central' scenario sees a thriving and robust Asian market, met with Western 'stagflation', and countries acting in 'isolated' regional blocks.

In this scenario, although the sector is likely to meet a tough and relatively ineffective global regulatory environment, those firms most able to tap into emerging markets are likely to be those most able to thrive.

Finally the 'downside' scenario sees the repeat of a 1930s style depression due to the collapse of the eurozone and failure to rebalance the world economy.

The report concludes that although the future remains uncertain, it is clear that decision makers must “take action now” to address current problems such as the eurozone crisis, which could significantly affect the competitiveness of the West in the long-term.

It also maintains the important role the insurance sector can play in the socioeconomic future, as an engine for growth for both the developed and developing world.

Ben Franklin, CII policy and research coordinator and author of the report, said:

"The next hundred years may well be just as dynamic and challenging as the last. In response, insurance and financial services professionals must remain one step ahead to provide credible courses of action in the face of numerous interlinked and complex risks.

"By planning for the long term and questioning assumptions about what the future might look like, the profession will be well-placed to provide the expertise necessary to navigate the potential hazards that lie ahead."

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