In a special edition of the Nin magazine “KBF 2025 Review,” distributed to all participants of the Forum, Chairman of the Executive Board of DDOR, Francesco Masci reflected on the economic and social context, challenges in the insurance industry, and strategies for strengthening resilience and sustainable development:
“To start with, despite the fact that inflation remains a pretty tough nut to crack, overall recent data paint a positive picture on the global economy in terms of growth and inflationary pressures, with the pandemic and its effects receding. However, economic risks aren’t subsiding, the global economy remains vulnerable to shocks and to bubbles in the financial markets, and the heightened global geopolitical uncertainties might complicate further the situation.
Besides, regardless of the fact that the efforts to bring down inflation following the pandemic’s shocks to supply have broadly succeeded, there still remains some ground to cover. So far, the Central Bank officials around the world have been trying to pull off a balancing act, on the one hand preventing aggressive rate increases from unnecessarily hurting the economic activity, on the other staving off the risk to undo the progress made on inflation in recent months. On the contrary, the bad news is that economic and geopolitical risks are increasingly at odds with the apparent calm in financial markets, where two years of nearly unrelenting stock-market gains have spurred numerous calls that markets are on the verge of a bubble. As a matter of fact, current financial market volatility is low and risk is high, and despite the war in Europe, renewed instability in the Middle East, worsening trade relations and adoption of duties and growing fiscal demands on governments (for defence, the energy transition and aging populations), investors are pricing in further interest-rate cuts and ambitious asset valuations.
The reality is that when the next slump arrives, governments will need various stimulus measures to cushion the blow, heading off the risk of impairing the big strides made until then, with most central banks having room to cut rates, despite some lingering concerns over entrenched inflation. All in all, the risk is greater if governments can’t respond powerfully, because excessive public debt restricts their options, therefore efforts to restore the fiscal consolidation should be a priority everywhere.
In general, Serbia remains well positioned to continue delivering a solid and sustainable growth pace, due to both the significant scope for future expansion and the investment-driven economic growth, and the robust fiscal management, which have been supporting the credit rating of the country. Also, in the country there is still a way to go in the climate action. At the same time, the local insurance industry is still under-developed relative to more mature and advanced economies. However, by recognizing the insurance sector as a strategic priority, nearly $19 trillion in capital investments – already committed – will be deployed globally to finance an equitable climate transition until 2030, of which $10 trillion require an insurance coverage. As a matter of fact, the insurance companies have developed numerous solutions aimed to tackle the financial risk embedded in the green agenda, and this will result in an acceleration of the process and will help plot a path for the future sustainable growth. But the public perception of the insurance must change, as too often it is viewed only a as a cost sustained to shield the individuals and the businesses in case of claims, but this only a far cry from the potential of the insurance solutions, which not only protect the investments, but also should be viewed as an enabler of further investments, as households and companies are more prone to make investments if they don’t have to worry about the risk of seeing their assets and goods being wiped out at the drop of a hat by a fire, a missed shipment or an unwelcomed mistake.
In addition, the insurance coverages have the potential to make sizable investments possible, especially by developing public-private partnerships, in the wake of the role played in the past underpinning meaningful social and economic transformations by supporting large-scale investments, such as the maritime trade, the cities’ electrification and whatnot. In general, insurance can play a catalytic role in fostering massive innovation, by diversifying and containing the risk, lowering the real costs, propelling the implementation of the highest standards and offering the security and the governance which are necessary to unlock capital flows, and this takes on added significance in the current environment where we’re confronting unprecedented challenges driven by the climate crisis and the loss of biodiversity.”