Interview: Jerome Jean Haegeli, Swiss Re
‘Risk iceberg’ call to action
Swiss Re’s group chief economist Jerome Jean Haegeli urges re/insurers to do
things differently to narrow the $1.2 trillion protection gap.
Swiss Re group chief economist Jerome
Jean Haegeli has urged re/insurers
to help improve the resilience of the
world economy by closing the “record high”
protection gap of $1.2 trillion, which he
called a “risk iceberg”.
He said different action was needed as
“more of the same was not the answer”.
Speaking to Monte Carlo Today after
the launch of the new ‘Indexing Resilience’,
which ranks countries according to their
macroeconomic resilience, he said that the
global economy is less resilient to absorbing
shocks than 10 years ago.
This has been caused by excessive debt,
a lack of growth-enhancing reforms and
monetary policy that has been pushed beyond
Haegeli pointed to factors such as the
$70 trillion increase in global debt burden
since the 2007/8 global financial crisis as
evidence that the world is less resilient,
while “extremely accommodating central
bank policies that have made it too easy for
politicians to avoid bringing in structural
reforms” have decreased the economy’s
capacity to absorb shocks.
Negative (nominal) yielding debt now
amounts to $17 trillion and may well increase,
given that central banks continue to push
interest rates lower.
Haegeli said central bank policies
disincentivise structural economic reforms.
Together with the fiscal expansion, they failed
to increase economic trend growth, which has
decreased by 2 percent compared with before
the global financial crisis.
“Australia is a good example of where
structural reforms have made a difference and
supported 29 years of economic expansion. If
you look back to the economic crisis in the
early 1990s in Australia, they used it as an
opportunity to bring in structural reforms,”
“Europe also had an economic crisis, but
it didn’t use the time well to do structural
“There’s a risk that the EU will now face a
Monte Carlo Today Day 4 Wednesday September 11 2019
“Even if it is resolved, the fact that it has
dragged on for such a long time means it
has had an effect already, especially on the
confidence of investors and consumers. At
worst it will lead to longer-lasting effects,”
It is in this less resilient global economic
climate that the $1.2 trillion insurance
protection gap means that 46 percent of nat
cat, mortality and health risks are not being
covered. The gap is about double what it was
a decade ago, he added.
“Whether efforts to narrow the evergrowing
protection gap are realistic or not, it
is important to track how the protection gap
is evolving. The fact it is at a record high is
“We have to ask ‘what is working in
the global economy, what is not working,
and where do we need progress?’. There
is evidence that the relationship between
insurance markets, insurance coverage and
macro stability is a strong positive one.
“As Swiss Re we can track the risks out
there on the macro front and have a consistent
analysis of the protection gap measures, and
we can propose reforms on the insurance
front,” he explained.
“For example, we need to have structural
reforms that should have happened already.
We need to build stronger private capital
markets and corporate solutions, and this
includes insurance solutions.” l
Jerome Jean Haegeli
coverage and macro
stability is a strong
recession. It’s very close given that half the EU
member countries have seen their economies
contracting measured by GDP growth. It’s a
“Our forecast is that Germany will be
the first G7 country to fall into a shallow,
but potentially more protracted, recession,
while the US has a 35 percent likelihood of
recession over the next 12 months.”
Another risk for the global economy is the
potential China–US trade war.
The top five
With any index there is a top five. The
country ranked top for macro resilience
in 2018 was Switzerland, followed by
Canada, the US, Finland and Norway.
The index shows the top movers
between 2007 and 2018: Japan, ranked
9th, up eight places since 2007; South
Korea in 14th place, up seven places;
China in 20th position, up six places;
Australia in 12th, up six; and New
Zealand in 13th spot, up six.