Tim Bethge is Head of Operations and Underwriting Services at Zurich Insurance. He shared his thoughts on what Belt and Road could mean for insurers with Swiss Trade.
What has the Belt and Road project meant so far concretely for insurers? Has it already led to new business?
Belt and Road is not just a buzzword. It is an opportunity for all participating countries to close the infrastructure gap and promote cross-border trade. While the potential benefits are enormous for companies, it comes with considerable risks and challenges. This is where insurance comes in.
What are the risks inherent in a monumental project like Belt and Road?
There can be a multitude of risks associated with construction and infrastructure projects, such as damage to property, equipment and machinery, potential disruptions to supply chains or project delays. But companies also face people risks, such as accidents and disease. Working in an unfamiliar place also puts them at risk of terrorist attacks, kidnap and ransom.
When companies venture into new territories under the Belt and Road initiative, they face regulatory risks in places where local laws, regulations and tax requirements are foreign to them. Any non-compliance may threaten the project and even cause damage to the company’s reputation. Given that the majority of the investment, financing, mergers and acquisitions will take place in developing countries, the credit and political risks add to uncertainties.
Switzerland is not directly on either the land or maritime routes under discussion. Does this mean benefits to Switzerland will be largely peripheral or indirect?
With its strong and sophisticated export sector, Switzerland is perfectly suited to support Belt and Road projects across many industries. For example, Switzerland has a very sophisticated insurance hub which could aid in the risk management of Belt-and-Road-related projects. Zurich as a global insurer has traditionally supported the buildup of large-scale infrastructure projects in Asia and Latin America such as the Panama Canal, the Hoover Dam or Hong Kong-Zhuhai-Macau Bridge.
For which industries does Belt and Road have the most significance?
The Belt and Road initiative will entail vast investment in the construction of transport facilities, railroads, highways and tunnels. The energy sector and sectors such as telecommunications and IT will also benefit.