The fear of escalating inflation has returned as the top concern for the world’s insurers, outstripping geopolitical and regulatory risks, according to research from BlackRock and reported on by Gill Wadsworth this week.
The asset manager’s Global Insurance Report covering participants in 33 countries with a total of USD23 trillion in assets under management, finds 63 per cent of insurers cite inflation as the most serious macro consideration.
Half of those surveyed say rising geopolitical tension and fragmentation is their major concern, while 42 per cent say the higher rate environment and 40 per cent point to regulatory developments.
In an environment punctuated by tariff uncertainty and ongoing global conflicts, insurers are showing a more cautious stance toward risk over the next 12 months, with only 13 per cent of respondents planning to increase their risk exposure.
Our In My Opinion also took a look at tariffs this week, with Dan Wales of Fulcrum Asset Management, unpacking the latest evidence on tariffs. The team conducted a thorough piece of research evaluating a central political claim that the costs of tariffs are being absorbed by foreign exporters, rather than US consumers or firms.
Wales writes: “We find little support for this claim. Customs and fiscal data confirm that US tariffs are generating over USD300 billion annually, roughly 1 per cent of nominal GDP. But this revenue does not reveal who ultimately pays. Detailed trade data show exporters have diverted roughly 15 per cent of affected trade flows away from the US, shifting sourcing from China to countries like Vietnam and South Korea. There is little evidence of exporters reducing dollar prices, mirroring the 2018–2019 episode. While domestic prices have risen only modestly, with core PCE up about 0.25 percentage points, model-based estimates suggest larger long-run pass-through is likely. The burden of these tariffs is therefore falling primarily on the US side of the border.”
Numbers from HFR this week revealed that hedge funds are having a good year, both in terms of asset raising and performance. “This historic growth has been driven by a combination of powerful trends including accelerating M&A, expanding cryptocurrency investment, falling geopolitical risk, expectations for lower interest rates, and an unprecedented surge in strategic AI investment and infrastructure,” says Kenneth J. Heinz, President of HFR.
Beverly Chandler, Managing Editor, Institutional Asset Manager
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