To counter this, the IMF issued USD 140 billion in bailouts in 2022 - a record amount. Notable countries to have received funds, or those that are currently in negotiation, include: Ghana, Zambia, Sri Lanka, Egypt, Tunisia, Pakistan and Argentina. In light of this stress on the global economy, we anticipate an increased risk to trade and investments in emerging and developed economies. Indeed, according to Fitch’s Country Risk Ratings, there has not been a single positive change in Europe in the past twelve months.

In addition to the above, perhaps the single greatest risk facing the world order is China. In recent years, the West has attempted to alleviate their economic dependence on China by moving manufacturing sites to other locations, excluding Chinese companies from strategically important industries such as 4G and microchip manufacturing, and strengthening ties with other regional players. In return, China has tightened its grip on Hong Kong and increased the frequency and size of its military exercises in the South China Sea.

Furthermore, in October 2022, President Xi stated, ‘we insist on striving for the prospect of peaceful reunification with the greatest sincerity and best efforts, but we will never promise to give up the use of force, and reserve the option to take all necessary measures.

This increasingly aggressive rhetoric has left foreign investors in China, Taiwan, Hong Kong and other regional countries even more uncertain. Gallagher’s PRI team has noticed this sentiment. Enquiries in the region are up by approximately 200% this year, whilst pricing for expropriation insurance - where available - has increased by up to 300%.

Despite an uncertain risk environment and a difficult month of reinsurance renewals, the SCPR insurance market remains resilient. Capacity stands at near record levels, with new entrants to the market and several insurers increasing their line sizes. However, appetite for certain countries and specific structures, such as multi-country policies, has been affected and we continue to monitor the fall-out from the war in Ukraine.

At this stage, few claims have crystallised but the market’s exposure to both countries remains significant. Moreover, there have not been many notable wording changes, but there has been a more concerted effort from the market to include the Five Great Powers Exclusion, and specific Russia Exclusions are becoming more commonplace. Nevertheless, the SCPR insurance market remains robust and committed to supporting new and existing clients.