Ageing infrastructure in the United States: how Swiss Re can help
Having profound knowledge of the complex risks in construction projects, none is better placed than Swiss Re Engineering to drive dialogue on refitting infrastructure with all relevant decision-makers and stakeholders.
Article information and share options
During the pandemic, thoughts of stimulating the world's economies are turning toward increasing investments in infrastructure projects. Swiss Re's new Sigma publication: Power up: investing in infrastructure to drive sustainable growth in emerging markets estimates that the emerging markets will invest an average of USD 2.2 trillion (3.9% of GDP) annually in infrastructure to 2040, making up two-thirds of global spend. This investment is needed to improve life quality, reduce inequalities and foster connectivity and economic growth.
But what about already existing infrastructure assets in need of restoration or refurbishment? The US American Society of Civil Engineers' (ASCE) 2017 Infrastructure Report Card has rated US infrastructure with a "D+". This means that many current assets in the US are in poor to fair condition – some even below standard, with many elements approaching the end of their service life or showing significant deterioration. On the investment side, US infrastructure outputs have long fallen behind what is needed to maintain a state of good repair for existing assets, which the report estimates at an additional USD 2 trillion to bring it up to a “B” rating by 2025.
Crumbling infrastructure bad news all round
Deficient infrastructure adds to the costs of doing business and makes many operations less efficient. Higher business costs result in lower profitability and/or higher prices, in turn lowering the return on investment, thus leading to less business investment. Reduced investment, in turn, means fewer jobs and less household income, and therefore reduced overall economic output. The costs from deficient transportation infrastructure also add up to households in a myriad of ways. In the worst case, deficient infrastructure can lead to loss of life and massive economic damage. For re/insurers, the infrastructure gap can directly lead to higher claims in many lines of business.
Swiss Re Engineering the go-to partner
As a risk bearer from deficient infrastructure, the re/insurance industry has a special interest in recognising, assessing, and mitigating the risks presented by ageing infrastructure. Having profound knowledge of the complex risks related to construction projects, none is better placed than Swiss Re Engineering to drive a dialogue on refitting infrastructure with all relevant decision-makers and stakeholders.
For Underwriters, the ASCE assessment is crucial to understand the exposure. From a pure Property re/insurance perspective, there are critical elements needed to evaluate a large Civil Engineering Completed Risk (CECR). To start, inspection reports and annual maintenance programmes are essential to understand the infrastructure asset status quo. Capital investment and natural catastrophe pre-emergency plans are vital to address any major key deficiencies found or code improvement requirements. To understand the ways the insured can minimise the impact of major events, there's also need for a business continuity plan with a strategy for revenue generation, information on the revenue sources, trends and forecasts.
These large engineered assets are key elements for the proper functioning of any economy. Keeping up and improving their condition is important to societal resilience. As underwriters, we can help to ensure risks are maintained at the high levels of quality needed to support economic development. Swiss Re offers significant, stable global reinsurance capacity, backed by our technical expertise, to meet your project needs.