How geopolitical risk is changing insurance & business

The global kind of instability has meant that it's less about isolated kind of incidents.

It's actually reminding us all that one event could ripple through lots of different areas and actually affect kind of businesses' operating model globally.

You look at lessons we've learned from the Ukraine, Middle East conflict, disruption in the Red Sea, U.S. tariffs, cyber events.

These all kind of remind us that actually, you know, you're not immune to any of these issues.

And I think one of the biggest change the industry have to think about is that history is no longer really reliable guide to what's going to happen in the future.

I think we've seen kind of deglobalization or interventionist approaches where I think countries or governments, you know, bodies are not going to react in the same way.

So we can't really see how things are going to pan out from there.

So the industry, the insurance industry, have had to take a different lens, a broader lens, and actually think about, well, what can that mean for businesses rather than just an isolated kind of event? Yeah.

David, it feels looking to the future at the moment is particularly a hard thing to do.

There are so many uncertains.

We know that, for example, AI will play a role, but what that role will be, who can predict? But saying that, I'm going to ask you anyway, what geopolitical and economic factors do you think will have the biggest impact on insurance over the next decade?

Well, insurance exists in a context, in a paradigm, and it responds to the context it's in.

So I guess just to also agree with what Hannah was saying, I mean, right now we are actually at an inflection point for insurance in the same way because it just reflects the world that we are an inflection point for the world so you know the the predictability of western um alliances of western trade of western diplomacy and politics are going or have gone uh war being contained in certain areas that we thought it would be somewhere over there that's changed it's on our doorstep the extreme nature of wars and conflicts is is changing in front of us and the the fundamentals of what a conflict looks like, bringing in AI and cyber, sort of grey actions, those sorts of things around the edges, is changing as well.

Those things are going to carry on.

So over the next 10 years, at least, that is what we're seeing.

I can't predict 10 years, obviously, especially with things like AI.

But over the next 10 years, that fundamental change in the world order, I don't think that's going to change for a while.

And that's what insurance... is dealing with.

And unfortunately, it's set against the background of the issue of climate risk and the speeding up of climate risk and resource nationalism and all the things that will lead to.

Talking about prediction and I suppose climate risk as well, something like climate change to a degree can be modelled.

But human driven risks like you spoke about there, such as conflict, are much harder, I guess, to predict.

So how do insurers account for that uncertainty in modelling and pricing?

So you're right.

Like there are certain areas that, you know, modeling is a well-accepted approach, but the long-term impact of modeling is to quite nascent kind of area.

So some of it's about using other techniques rather than just modeling.