The global political risk and crisis management insurance market looks set to top $10bn by 2018, an anticipated $2bn of growth, research by KPMG has found.
It said the challenging macroeconomic environment, recent terrorist attacks, growing cyber threats and global political uncertainties had led to a surge in demand for political risk and crisis management protection.
KPMG's report Political risk and crisis management insurance: Opportunities for growth identified two significant gaps in the market. The first was the absence of new products that address emerging customer needs, such as business interruption costs without property damage.
The second case was the capability to evolve insurance towards prevention and response consulting services, helping clients to stop risks from happening and minimise disruption after an event.
Paul Merrey, partner in KPMG's global strategy group, said: "Political risk and crisis management is currently one of the top issues in the minds of executives across various industries.
"All these events require robust crisis management responses from the businesses involved and the insurance industry can, of course, help facilitate this process.
Our analysis indicates that providing strong risk prevention and response services could be one of the major areas of growth over the next two years."
KPMG's report said the overall political risk and crisis management insurance market was worth some $8.1bn, with almost all its segments showing demand growth, in particular for cyber security.
However, this was "strongly undermined" by challenging macro-economic conditions around the world.
It predicted the soft market environment and profitability challenges were unlikely to recede in 2017, this: "forcing insurance carriers and brokers to find ways to innovate and seek partnerships outside insurance".