Inflation Can Become a ‘Silver Lining’ for the Insurance Industry

Interest rates will keep going up. But that won’t be entirely negative for the insurance industry, or the longer-term fundamentals of the broader economy, suggested a new Sigma report from Swiss Re.

Its authors called for two fundamental changes on the financial side of the global economy. The first -- pushed by central banks’ efforts to fight inflation -- is an end to the ultra-low, and even negative, interest rates that have characterized much of the last three decades.

And, they predicted, that change should shift investment away from companies that derive value from intellectual property and brand perception, and toward companies that make actual goods.

‘This shift is likely to contribute toward reallocating private sector investment away from intangible and towards tangible assets, bringing the financial and the real economies closer together,’ Swiss Re said in Maintaining resilience: the role of P&C insurers in a new world order.