Political risk insurance demand up 33% following trade disruption – Howden

Demand for political risk insurance rose by 33% in the last year as global clients sought protection against heightened geopolitical tension, macroeconomic uncertainty and supply chain disruption.

That was according to a new report published by Howden, called Opportunity in flux, which revealed that the total surety and credit and political risk insurance (CPRI) market reached a sizeable £39.3bn ($50bn) in aggregated premium.

However, the report also revealed that while the market has continued to deliver strong underwriting performance, premium growth in some areas has not kept pace with other insurance lines.

According to Howden’s findings, premium growth has been running at less than half the rate of property and casualty and just a fifth of cyber since 2019.

Matthew Strong, deputy chief executive at Howden CAP and head of credit and political risk, said: “With demand for CPRI protection rising, now is the time for the market to step up even further.

“This will enhance global economic growth by increasing commitments and innovating, as well as providing businesses, lenders and public sector entities around the globe with the certainty they need to trade and invest with confidence.”

Opportunity

The report also noted that healthy net combined ratios – typically between 70% and 80% – offered a compelling case for capacity providers and policyholders.

Phil Bonner, managing director for global specialty treaty at Howden Re, added that a takeaway from the report was the scale of opportunity facing CPRI providers.

He said: “Yes, risk is up in a highly fractured world, but providing protection to help clients trade and invest through such uncertainty is precisely why CPRI exists.

“Our market does this in a way no other can whilst achieving exceptional performance, as demonstrated by underwriting results that rival any other product line of insurance. As demand for protection rises in response to global instability, our call to action for the market is to not only provide adequate supply, but to also offer underwriting flexibility and imagination that keep up with clients’ changing needs.”