Geoeconomic fragmentation reshaping the global risk landscape

A new report from Brokerslink and the Swiss Re Institute warns that rising geoeconomic fragmentation, marked by widening divisions between economic blocs and potential restrictions on the free flow of capital, could have profound and lasting consequences for international risk diversification and, ultimately, the cost of insurance.

The joint study examines how shifting trade dynamics, new tariffs, and escalating geopolitical tensions are reshaping the global risk landscape and what this means for insurers and reinsurers.

According to the report, growing geoeconomic fragmentation could even constrain the insurability of peak risks.

Political divergence is also reportedly undermining international cooperation on critical global challenges, including climate change, pandemics, and cyber threats, thereby heightening worldwide exposures.

“Society ultimately bears the cost of fragmentation as firms and individuals could have less insurance coverage, keeping protection gaps wide,” the report said.

While the short-term impact of recent US trade tariffs on primary insurance premiums is expected to remain limited, the more significant challenge lies in their longer-term structural effects.

“Even if the US and China have reached a temporary truce on trade tensions through to next year, the wider reordering of global trade flows will continue in the years ahead,” the report noted.

Swiss Re estimates that an effective US tariff rate of 15% could shave around 0.7 percentage points off global Property & Casualty premium growth and 1.2 percentage points off Life premium growth between 2025 and 2027, compared with projections based on 2024 tariff levels.

In the US, inflationary pressures stemming from higher import costs are expected to push up claims, particularly in property and motor lines.

Outside the US, however, the report suggests that the inflationary and claims effects should remain contained, and in some regions, such as Europe, may even help moderate inflation.

Amid this rising global uncertainty, the report highlights growing demand for insurance protection.

The cyber market, in particular, is projected to see double-digit growth, fuelled by heightened geopolitical tension and increasing digital exposure, including through AI-driven transformation.

Meanwhile, the shift toward re-industrialisation for strategic autonomy, alongside the ongoing energy transition, is expected to generate substantial demand for commercial and specialty insurance solutions.