Gallagher unveils outlook on insurers' political risk capacity

Gallagher unveils outlook on insurers' political risk capacity | Insurance Business

Gallagher unveils outlook on insurers

If new figures released by global broker Gallagher are anything to go by, it looks like there’s nothing to fear, capacity-wise, when it comes to the world of credit and political risk commercial insurance.

According to the broking giant’s market update, rising geopolitical tensions have not stopped insurers’ capacity from maintaining a nearly all-time high level. Here are the headline numbers published by Gallagher:

  • Political risk – US$3.092 billion
  • Trade and secured Non-Trade Gov't Counterparty – US$3.123 billion
  • Trade and secured Non-Trade Private Counterparty – US$2.475 billion
  • Unsecured Non-Trade – US$1.752 billion

The broker explained that while some providers’ risk appetite remains tempered by losses connected to the commodity downturn, the market mostly continues to be open to underwriting opportunity.

“Supported by new entrants, activity from January to July 2019 – as identified by key players in the market – has been aided by traditional insurance buyers acquiring more insurance, as the product becomes embedded in their own businesses,” explained Gallagher, adding that it’s also been helped by: “Further cooperation between the private market and the public sector (such as export credit agencies and multilateral institutions), with commercial insurers taking an optimistic view of the impact public sector institutions can have, especially when transactions face challenges.”

Meanwhile, structured credit and political risks managing director Matthew Solley pointed to how “the range of risk factors and potential issues for insureds and insurers alike is showing no signs of slowing in 2019,” citing concerns that include US-China trade tensions and depreciating emerging market currencies.

“Despite such issues, the increasing depth of expertise within the market is enabling insurers to continue to take on risks in challenging territories, providing cover which is of critical importance in enabling emerging market growth, while policyholders have the benefit of protection from well-rated insurers,” asserted Solley.

“Effective risk mitigation for trading, financing, and investment activity globally leads to a more stable environment for investors, corporates, financiers, and traders in uncertain times.”