An infrastructure spending boom in emerging markets will create a “premium opportunity” of more than $US50 billion ($72.96 billion) for insurers over the next 10 years, Swiss Re says.

The reinsurer’s latest Sigma report says the figure is based on forecast investment across the seven largest emerging markets: Brazil, China, India, Indonesia, Mexico, Russia, and Thailand.

“Spending on infrastructure could be one of the ways to kickstart parts of the economy after the COVID-19 pandemic and help drive strong and sustainable growth over the next decade,“ Swiss Re chief economist Jerome Jean Haegeli said.

Emerging markets are forecast to grow by around 4.4% a year over the next decade, compared with a projected 1.8% growth in advanced markets, investing $US2.2 trillion ($3.2 trillion) in infrastructure annually over the next 20 years.

Most infrastructure spending will be in emerging Asia, which will be the “engine of global economic growth”. With government budgets under strain, the private sector will play a bigger role via public-private partnerships.

This presents an annual $US920 billion ($1.34 trillion) opportunity in emerging markets for long-term investors – including global insurers who can also underwrite the risks as these infrastructure projects generate new demand for insurance solutions, Swiss Re says.

Engineering construction-all-risk premiums are estimated to be $US22 billion ($32.02 billion) while property premiums are estimated to reach $US19.4 billion ($28.23 billion) and premiums from renewable energy projects around $US9.7 billion ($14.11 billion).

There will also be increased demand for marine and liability insurance and big spending on renewable energy to improve public transport, utilities and waste disposal systems, and power stations and grids.

Total infrastructure investment in emerging Asia will average $US1.7 trillion ($2.47 trillion) a year over the next 20 years, or 4.2% of GDP, to reach $US35 trillion ($50.9 trillion) in total.

China will invest an estimated $US1.2 trillion ($1.74 trillion) each year, accounting for 35% of global investment in infrastructure, and will account for 60% of the infrastructure premiums over the coming decade, the report says.