Geopolitical tensions, fueled in particular by American President Donald Trump, are redefining the global order. Or at the very least, they are profoundly changing its parameters, especially from an economic perspective. No industry is immune, including the insurance industry. This was one of the conclusions that emerged from the panel: “Geopolitics has now become a major accelerator of uncertainty. What are the impacts on businesses?” The event was organized as part of the Day of Damage Insurance by the Editions of the Insurance Journal on March 31st at the Palais des Congrès de Montréal.
The uncertainty on the world stage is partly attributable to the unpredictability of the United States, whose actions vary according to the moods of its President, Donald Trump, as indicated by Frédérick Gagnon, holder of the Raoul-Dandurand Chair in Strategic and Diplomatic Studies at the Department of Political Science at the University of Quebec in Montreal (UQAM).
“He himself says it in his book ‘The Art of the Deal’: he boasts of making decisions with his gut and instinct,” notes the political scientist. “He governs like that: he can come in the morning with a small idea of what he is going to do, but he can change his mind during the day. So it’s difficult to predict, even for his entourage, who disagree on what should be done in foreign policy.”
Economic Integration under Pressure
This can partly explain the hesitations and numerous twists and turns that have punctuated the war in Iran since the beginning of the year.
“We are not close to a solution,” emphasizes Martine Hébert, senator, economist, and former delegate from Quebec to Chicago and New York. “And there are extremely important consequences for the global economy that could persist over time.”
The rise in energy prices, persistent inflation, tariff policies, and increased caution from central banks make up an uncertain environment. As a result, many companies hesitate to invest, fearing that political decisions may compromise their strategies.
“Business people are worried and preoccupied by the current situation,” summarizes Ms. Hébert.
However, agreements under the Canada-United States-Mexico Agreement (CUSMA) cannot be dismantled overnight, she argues. Furthermore, the continental economy has been integrated for decades.
“It has been years since industries have developed within the framework of a free trade agreement,” she recalls. “In many industries, manufactured products are designed in the United States, parts are made in Canada, and then assembled in Mexico. The finished product then returns to the American market.”
“It’s not true that you can change a production chain overnight and that it costs nothing,” she adds.
Investing in a Volatile Context
From an investment perspective, market volatility poses a major challenge. Insurers, who manage significant portfolios, must adjust their strategies.
“When it comes to investing to guarantee policyholders’ compensation while reducing financial losses, insurers and actuaries show pragmatism,” says Louis Gagnon, CEO, Canada, at Intact Financial Corporation. “We simply need to adjust. The return on investment must be higher because the risk is higher.”
“We are looking at possible places to invest,” he continues. “We are currently in Canada, the United States, and Europe… It’s true that currently, in the United States, the cost of capital is higher. We saw this with the One Big Beautiful Bill, the Americans’ temptation to control their markets more is very present.”
Therefore, caution is essential. “It’s not a moment where we can talk about opportunities,” he advises. “We need to stay calm and understand the impacts on our sector.”
Climate and Long-Term Risks
Although 2025 has been relatively calm in terms of natural disasters, 2024 set a record with over 9.2 billion dollars in insurable losses. Despite these signals, many governments have slowed down their efforts to combat climate change.
“The United States set the tone for this radical shift,” asserts Martine Hébert. “They have abolished billions of dollars intended to invest in energy transition, in climate transport… and we are seeing the consequences.”
This relaxation in efforts could have significant consequences on the claims and compensation that insurers will have to pay out.
“We must be prepared to face it,” says Louis Gagnon.
[Context: The article discusses how geopolitical tensions, especially driven by President Donald Trump, are reshaping the global order and impacting industries like insurance.]
[Fact Check: The news article reflects multiple perspectives on the effects of geopolitical uncertainty on various industries and the need for strategic adjustments in investments and policies.]
