Change is a constant the insurance industry understands well. The industry’s profitability has always been dependent on how acutely it understands its customers, the communities in which they live and work, and the economic and regulatory environment in which insurers operate.

Change is the shifting plane on which risk is assessed and managed, and through the centuries the insurance industry has proven more adept than most in navigating exposure to risk.

But the 21st century is about change on an unprecedented scale in terms of sheer impact, pace and interdependency.

For business leaders this calls for an agility not called on previously; an ability to monitor, anticipate and respond in real time to transformational change that leaves no room for reflection, doubt or resistance.

This isn’t an easy challenge for the monolithic insurance industry, which is both strengthened and potentially handicapped by centuries of tradition and certainty.

Insurers have been operating in a global economy long before globalisation became an economic reality for most other industries, but today’s global trends present a different challenge.

Where operating globally once meant segmenting markets, spreading risk and differentiating competitive and operational responses, global trends have made the world an infinitely smaller yet more complex market.

In today’s global market, insurers have nowhere to hide.

Many of these trends – covering the gamut of social, political, technological and natural change as well shifting competitive and business environments – have been documented to varying degrees of insight.

The latest report to do so, Swiss Re’s annual Sonar report, is required reading. It provides a sobering and comprehensive overview of the winds of change reshaping the risk landscape.

Swiss Re has identified the macro trends and emerging risks likely to have a high impact within the next five to 10 years, many with the potential to redefine the insurance industry.

As the Zurich-based reinsurer points out, not all of the trends are new or emerging. Economic uncertainty, low interest rates and “increasingly stringent” regulatory requirements have already influenced the industry in recent years. But they are no less capable of posing new challenges – and offering new opportunities – for the insurance industry.

Climate change is perhaps the most pressing trend of all. Stubbornly resisted by naysayers despite the overwhelming anecdotal and, more importantly, scientific evidence, the insurance industry has no such doubts and has been on the front foot in its response to climate change for many years.

Insurance industry leaders have played a critical role in United Nations forums in mitigating the social and economic impact of climate change and strengthening the resilience of communities. The industry’s leadership on climate change is both a reflection of high-minded corporate citizenship and a pragmatic acknowledgement that, as Swiss Re, observes, “the rise of global average temperatures disrupts a complex climatic system, resulting in more severe and frequent catastrophic events”.

“The accumulation of assets in highly exposed areas as a result of urbanisation and a growing middle class in emerging markets will increase the economic costs of such disasters,” Swiss Re says.

Another trend that presents both a challenge and an opportunity for insurers is growing life expectancy. Globally, life expectancy at birth is projected to rise from 70 years in 2005-2010 to 77 years in 2045-2050.

The costs of funding retirement income, healthcare and long-term care in old age will increase dramatically, which will have significant financial consequences for individuals, insurers and society in general.

As governments increasingly move risks into the private sector, Swiss Re notes that the changing life and healthcare landscape “calls for new insurance solutions and opens opportunities for partnerships between public and private initiatives”.

A trend that is proving as revolutionary in our own lives as well as the competitive environment in which insurers must operate is the rapid and profound impact of new technologies.

Increased connectivity, social media platforms and the sharing economy are transforming households, communities, schools, workplaces and whole industries. The technology revolution has left few principles untouched, including the conduct of business and the business models through which markets are accessed.

“These changes will intensify the demand and supply of new insurance products and distribution channels. Industries with a strong affinity for technology and data analytics, such as search engine companies, social media providers, telecommunication companies, but also online shops, retailers and payment providers will gain access to big pools of user data and interact with a large customer base,” Swiss Re says.

“Insurance companies might want to secure strategic partnerships with such companies to capitalise on business opportunities.”

The insurance industry also faces fundamental shifts within the industry. Attraction and retention of talent has a heightened urgency in an environment of demographic shifts and changing skill requirements, particularly scarce technological and data skills that are considered crucial in today’s insurance industry.

Swiss Re also points to “structural shifts in the risk transfer value chain [that] disturb the balance of power in established markets”.

“Demand for reinsurance is shrinking as primary insurers increasingly retain more insurance business on their balance sheet, and supply is growing as traditional and alternative capital is merging. Correspondingly, brokers are changing strategies to defend their customer access and develop new capabilities and services.”

Lurking within these huge macro trends are the emerging risks that additionally challenge the insurance industry.

The three emerging risks with the highest potential impact, according to the Sonar report, are “emerging markets crisis 2.0”, “the great monetary experiment” and “internet fragmentation”.

• Emerging markets crisis 2.0: Turmoil in emerging countries could hinder the market entry and the penetration strategies of global insurance companies and even result in higher underwriting losses, especially in property, personal and commercial lines.

• The great monetary experiment: The long-term costs of negative interest rates and unconventional monetary policies are unknown and may lead to a broader loss of confidence in the monetary system.

• Internet fragmentation: Firewalls, special software to filter out unwanted information and isolated IT infrastructure detached from global networks: disconnected nets could soon become a reality. Their potential impact includes increased costs and disrupted business models for insurance companies operating across borders.

Other emerging risks include the impact of mass migration, a “crisis of trust” in institutions and the legal and pricing risks of the sharing economy.

The sharing economy is rapidly moving from economic curiosity to a deeply embedded feature of the new digital economy. While this may provide new business opportunities for insurers, it also brings legal risks and challenges to adequately model and price the associated risks, Swiss Re warns.

With the rise and increasing sophistication of the sharing economy, the report warns that traditional insurers may face pressure from new players that can access client segments through a sharing-economy model.

This is especially pertinent as insurers, among the most visible of “establishment institutions”, face a “crisis of trust” as citizens increasingly distrust public institutions, particularly governments, large corporations, banks and multinational organisations.

Swiss Re Group CRO Patrick Raaflaub warns there are emerging risks that are “newly developing or evolving risks whose potential impact and scope are not yet sufficiently taken into account” by the insurance industry.

As he pointedly observes, risk management is not just about managing risks in the present, “it is about anticipating future ones to make sure [the industry] will be in a position to deal with them”.

The critical message of the Swiss Re report is clear: industry players must prepare for new scenarios by adapting their behaviours, market conduct and product portfolios.

“It would be easy to ignore many of these risks and focus on the business that we already underwrite. But that is not an option; as an industry we need to help promote a resilient society and sustainable business,” Dr Raaflaub says.

“Therefore we need to understand these new developments and prepare for the risks of tomorrow.”

All of which may be easier said than done, but there can be no sitting on hands. The continued prosperity of the insurance industry will fall to those insurance leaders who can demonstrate the agility, innovation and foresight to make the transformational leaps that today’s (and tomorrow’s) very different world demands.