Investments in new renewable energy capacity will generate US$237bn (£205bn) of additional insurance premiums by 2035 if all national targets are delivered on, research by Swiss Re suggests.
However, the reinsurance giant warned that the transition to a green economy requires global efforts, and fragmentation based on geopolitical and security concerns could potentially impede the co-ordinated action required.
In a new report, the company also explains how COVID-19 and the war in Ukraine have exacerbated deglobalisation, creating an environment where concerns about supply chain resilience, energy and food security prevail.
Reshoring is forecast to generate an additional US$30bn in global commercial insurance premiums over the next five years, mostly from engineering, property and liability covers. 'Friend-shoring' of supply chains to allied countries is expected to add US$3bn in premiums.
Furthermore, with the global population expected to reach almost 10 billion over the next three decades, Swiss Re forecasts agriculture insurance premiums to reach US$80bn by 2030, up from US$46bn in 2020.
“Triggered by the war and the pandemic, we are shifting from an interconnected to a multi-polar world faced with disrupted supply chains, energy and food crises,” said Jérôme Haegeli, group chief economist at Swiss Re.
“Insurance is becoming even more vital to the economy, contributing to the financial stability of businesses by covering supply chain risks.
“The industry can also facilitate the transition to a green economy by insuring and investing in renewable energy infrastructure, and by expanding agricultural insurance, it can contribute to global food security.”
This comes after separate research by insurance firm Beazley recently found that few business leaders across the UK and US feel able to manage current geopolitical risks well.
Specifically, 55% believe that they lack the necessary resilience to deal with inflation, which rises to 65% in the US. The proportion of business leaders ranking war and terror as their top risk is up 46% on the previous year, while economic uncertainty is up 31%.
Roddy Barnett, head of political risks and trade credit at Beazley, said that business strategies are now at a “point of inflection”.
He added: “Even those territories far removed from the war in Eastern Europe are feeling the impact of global sanctions and commodity shortages on risks across the board from supply chain to cyber to political risk and trade credit.”