Future socioeconomic impact on insurance revealed in CII report

The impact of the world’s future socioeconomic issues on the insurance and financial services sectors have been revealed in a new report by the CII.

The “Future Risk” report, which is entitled ‘Social and economic challenges for tomorrow” and was published as part of the professional body’s centenary activities, predicts three possible scenarios based on insight from five industry experts.

They include David Smith of the Sunday Times on UK competitive advantage, George Magnus of UBS on tackling the economic implications of global longevity trends, Dr Uri Dadush of the Carnegie Endowment for International Peace on the long-term economic outlook for the USA, Andrew Leung, China specialist on the future of Chinese monetary policy and Laurence Whitehead of Oxford Analytica on dealing with uncertainty in an increasingly globalised and risk averse world.

The three future scenarios set out very different outcomes for the world and the financial services sector, including the Upside Scenario, where the West is resurgent while the East thrives, with countries collaborating on the major socioeconomic problems. In the insurance sector, Western companies remain competitive though pressurised by Asian providers.

The Central Scenario depicts Asian growth and Western stagflation, with countries acting in a more isolated manner and insurance businesses operating in emerging markets managing to prosper.

The third, and final, Downside Scenario suggests a 1930s-style depression in the West, combining Eurozone implosion with currency wars and geopolitical tension and unrest.

CII policy and research co-ordinator and author of the report Ben Franklin said: “The next hundred years may well be just as dynamic and challenging as the last. In response, insurance and financial services professionals must remain one step ahead to provide credible courses of action in the face of numerous interlinked and complex risks.

“By planning for the long term and questioning assumptions about what the future might look like, the profession will be well-placed to provide the expertise necessary to navigate the potential hazards that lie ahead.”

Click here to download the report.