In an era defined by volatility, Simon Glairy stands as a crucial interpreter of the complex forces reshaping our world. A recognized expert in insurance and Insurtech, he specializes in the intricate dance between global risk and the financial mechanisms designed to manage it. As the World Economic Forum’s latest report signals a shift into a new “age of competition,” we sat down with Simon to understand what this turbulent future means for the insurers and reinsurers on the front lines.
Our conversation explored the profound recalibration facing the industry. We delved into the urgent need to integrate geopolitical conflict into core risk models, moving it from a peripheral concern to a primary driver of loss. We also navigated the dual-edged nature of artificial intelligence, examining how carriers can harness its power while defending against its emerging threats, like systemic bias and sophisticated misinformation. Simon shed light on the deceptive quiet around short-term environmental risk, warning of the long-term dangers of complacency, and unpacked the central, destabilizing role of inequality in the global risk network, proposing new ways to underwrite social fragility. Finally, we tackled the breakdown of traditional diversification in a world where a single digital or political shock can trigger cascading, cross-sector crises.
Geoeconomic confrontation is now viewed as the top trigger for a global crisis, displacing armed conflict. How can insurers shift from treating geopolitics as background noise to a core modeling input, and which specific lines, like trade credit or political risk, are most vulnerable? Please elaborate.
For decades, geopolitics was a low-frequency hum in the background of most underwriting rooms. Now, it’s a blaring alarm. The data from the report is stark: 18 percent of experts see geoeconomic confrontation as the most likely trigger for a material global crisis. This isn’t just about tanks and jets; it’s the weaponization of the very systems our commercial lines are built on—supply chains, capital flows, and data. The first step for insurers is to stop treating this as an exogenous shock and start building it into capital and stress testing, just as we do for a major hurricane. The most exposed lines are the obvious ones—trade credit, political risk, marine—but the contagion is far wider. Think about supply-chain contingent business interruption, where a sudden export control on a critical technology can halt production for a client thousands ofmiles away. We’re in a “contested multipolar landscape,” as the report says, and our models need to reflect a world where economic tools are the new front line.
Adverse outcomes from AI are the fastest-rising long-term risk, with misinformation being a top near-term concern. How can insurers balance using AI for efficiency with managing new vulnerabilities like algorithmic bias and systemic cyber risk? Could you walk us through some practical risk-management steps?
This is the quintessential double-edged sword for our industry. On one hand, AI offers a tantalizing promise of hyper-efficient underwriting and claims processing. On the other, the report shows its adverse outcomes have made the steepest climb of any risk in the 10-year outlook, from 30th to fifth place. The immediate threat is misinformation, ranked as the second-most severe risk over the next two years. A practical first step is to treat our own AI models with the same rigorous risk management we apply to our clients. This means moving beyond black-box systems to demand transparency and explainability from our tech vendors. We need dedicated teams auditing algorithms for bias, not just at launch but continuously, because biased pricing can become a major regulatory and reputational crisis. Another critical step is to rethink systemic risk. If a significant portion of the industry relies on a few dominant AI platforms or data sources, we are creating a single point of failure that a sophisticated cyber-attack could exploit, triggering correlated losses across hundreds of carriers.
In the near-term, environmental risks appear to be deprioritized, yet they dominate the 10-year outlook. What is the danger for insurers if they align their strategies with this short-term view, especially concerning infrastructure resilience and long-term insurability? Please provide some potential metrics to watch.
This is perhaps the most concerning finding in the report for a long-tail industry like ours. It signals a dangerous collective myopia. While political and economic fires are burning in the foreground, the long-term climate furnace is getting hotter. The data shows extreme weather events falling from second to fourth place in the two-year risk ranking, but they reclaim the top spot on the 10-year horizon. The danger is that the insurance industry, following the political news cycle, might ease up on its own climate strategy—reducing investment in resilience, softening underwriting standards, or failing to price the long-term signal. This would be a catastrophic error. A key metric to watch is public and private capital expenditure on infrastructure hardening. If that number stagnates or falls, it’s a red flag that our future losses are growing because society isn’t keeping pace with the risk. Another is the growth of the protection gap in vulnerable regions; as we see coverage become unaffordable or unavailable, it’s a direct indicator that insurability is eroding.
With inequality identified as the most interconnected global risk, fueling social fragility and civil unrest, how can carriers practically build social indicators into their underwriting for urban property or liability lines? Please walk me through how this might change a risk assessment for a specific asset.
For two years running, the report’s “interconnections map” has placed inequality at its very center. It’s not just a standalone risk; it’s the gravity well that amplifies everything from political polarization to civil unrest. For insurers, this means we can no longer afford to view social conditions as separate from physical risk. Let’s take the risk assessment for a large urban commercial property. The traditional approach would focus on fire suppression, building codes, and maybe local crime statistics. An evolved approach would integrate social fragility indicators. We could layer in data on local income disparity, youth unemployment rates, and trust in institutions. We might even use sentiment analysis of local social media to gauge the level of political polarization. Suddenly, two identical buildings in different parts of the city no longer carry the same risk profile. The one in a district with high economic strain and intense social friction has a demonstrably higher risk of loss from strikes, riots, and civil commotion, and its premium should reflect that reality.
As geoeconomic confrontation and cyber insecurity rise, traditional diversification assumptions may no longer hold. How should the industry rethink accumulation risk when a single digital or political event can trigger cascading, cross-sector losses? Can you share a plausible scenario and the steps to mitigate it?
The very concept of diversification is being stress-tested. We used to believe that diversifying across geographic regions or lines of business provided a robust defense. But as the report highlights, we now face a clustering of risks where a single trigger can ignite a fire that burns across the entire portfolio. A plausible and frankly terrifying scenario would be a state-backed cyber-attack that successfully targets a core piece of digital infrastructure, like a major cloud services provider. The first wave is a flood of cyber insurance claims. But then the cascading effects begin. Global supply chains reliant on that provider grind to a halt, triggering massive business interruption losses. Financial markets, also dependent on that infrastructure, seize up, leading to D&O claims and devastating blows to insurers’ own investment portfolios. To mitigate this, we have to move beyond siloed risk management. We need integrated scenario modeling that stress-tests the entire balance sheet against one of these multifaceted events. This means bringing together political risk analysts, cyber underwriters, and investment managers in the same room to map out these correlations and identify the hidden accumulations before they cripple the company.
What is your forecast for the insurance industry’s role in navigating this new ‘Age of Competition’?
My forecast is that the industry’s role will become more critical, but also more challenging, than ever before. We are moving from a world of predictable, if severe, natural catastrophes to one of human-driven, interconnected, and often intentionally malicious crises. The “age of competition” will test our models, our capital, and our very purpose. However, the report’s conclusion points to a path forward: cooperation. While the world may be fragmenting, the insurance industry is, at its core, a mechanism for cooperation and mutualization. Our role will be to act as a stabilizing ballast. By using our expertise in risk analysis and pricing, we can create incentives for better behavior—whether it’s encouraging companies to build more resilient supply chains, adopt more secure AI, or invest in climate adaptation. We can’t stop the geopolitical tides, but we can help build stronger sea walls. The forecast, then, is not just for survival, but for the industry to assert itself as an indispensable navigator in these stormy, uncertain waters.
