Overview of economic distortions

Supply chain bottlenecks

• Companies are generating fewer sales, resulting in a lower premium volume
• Length of interruption for business interruption claims is increasing, resulting in higher claims payments
• Loss mitigation is becoming more difficult – especially in the area of business interruption, which is also leading to higher costs

• Pressure on premiums is increasing
• Sums insured and indemnity periods, particularly in the area of business interruption, need to be reviewed
• Loss mitigation is becoming more difficult because there are fewer alternatives in terms of provisional arrangements or third parties
• Inventories must be increased, and sums insured are increasing

Inflation

• Higher claims payments
• Uncertain pricing for risks with a long-term impact such as liability and personal insurance
• Higher wages, higher premium volume
• Adjustment of sums insured (reassessment of inventories)

• Wage and therefore margin pressure
• Greater uncertainty in pricing for capital goods with long delivery times

Interest rate hikes

• Less investment, which means less project insurance
• Increased income from investments

• Ditto insurance industry

Skills shortages

• Staff shortages, resulting in risk of longer waiting times and declining quality
• Prioritisation of enquiries due to limited capacity in underwriting, resulting in less choice for insurance solutions offering good value for money

• Staff shortages, resulting in risk of longer waiting times and declining quality
• Increased planning effort
• Projects cannot be implemented
• Employee market, resulting in pressure for wage increases, improved benefits

Cybercrime

• Need for insurance solutions is increasing while availability is decreasing
• Clarification still needed regarding the handling of ransom payment claims
• Will this risk be insurable in the future?

• Need for greater employee awareness
• Need for risk assessments
• Investment in IT security
• Conclusion of cyber policies

Environment-Sustainability-Governance (ESG)

• ESG is also becoming increasingly important in the submission process
• Number of risk carriers could reduce with lack of knowledge in relation to ESG
• Investment policy of multi-employer plans is being examined more closely with regard to this criterion
• ESG is also becoming increasingly relevant in the area of D&O

• ESG belongs in the corporate strategy
• Need for greater awareness
• Number of possible insurance partners is (still) falling, further strengthening the sellers’ market

Geopolitical power relations

• There is general uncertainty, inhibiting investment
• Sanction clauses (country lists) will increase
• Consequences of war: Rising energy and raw material prices, disrupted supply chains, poverty in certain countries

• Ditto insurance industry

Pandemic awareness and globalisation

• Lack of clarity regarding handling of future pandemics by the insurance industry

• Residual risk remains, state as protective shield?
• Only limited insurable risk – thus business risk

Energy shortage

• Risk if electricity, gas or oil consumption is restricted:
  Private use => Risk for those working from home
  Industry/services => IT systems operating at reduced capacity

• Risk of idle factories, depending on where the state prioritises
• Energy-intensive production facilities (e.g. glass production or large bakeries) may have to reduce capacities
• Investment in redundant, alternative energy supplies could increase