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Disruptive forces present chances and challenges: Guy Carpenter

Urbanisation, technological advances, increased connectivity and an ageing population are the four major disruptive forces in the global economy and insurance market, according to reinsurance broker Guy Carpenter.

Vice-Chairman International Operations Victoria Carter says the world’s urban population is expected to grow by 50% to more than 6 billion by 2050.

“Cities rely on infrastructure and infrastructure relies on investment, and each relies on insurance,” she said.

She says rapid urbanisation in emerging markets is “tilting the global economy on its axis”, giving countries in the east and south economic ascendancy.

“By 2025 almost half of companies with revenues in excess of $US1 billion ($1.31 billion) will be headquartered in markets such as Mumbai and Shanghai, along with rapidly expanding hubs such as Hsinchu in northern Taiwan and Santa Catarina state in Brazil.”

An estimated $US43 trillion ($56.51 trillion) will be invested in urban infrastructure between 2013 and 2030, providing a huge opportunity for insurers.

Guy Carpenter says the insurance industry must harness data and technological advances to understand, measure, monitor and price risk correctly.

Increasing connectivity is spawning a new phase of globalisation “full of opportunity, with equal exposure to rampant volatility, interruption and malicious attack”.

In terms of ageing populations, Europe is projected to double its 65-plus population to 30% of all people by 2050, while the most economically active 25-64 age group is expected to account for less than half the population.

Ms Carter says insurers will also need to innovate and adapt, and work with leaders in other markets, such as fintechs.