Allianz Risk Barometer 2021 -
Market developments

As the world continues in the throes of an economic downturn amid a disruptive coronavirus pandemic, market developments climbs one position year-on-year in the Allianz Risk Barometer, reflecting the risk of rising insolvency rates following the pandemic. Growth in the number of insolvencies (38%) is the third most impactful change companies expect to see from the pandemic after acceleration towards greater digitalization (55%) and more remote working (50%).

There were six “mega” bankruptcy filings involving businesses with at least $1bn in reported assets during the first quarter of 2020, 31 in the second, and 15 in the third, for a total of 52, compared with a 2005 to 2019 quarterly average of five, according to Cornerstone Research [1]. The impact of a gradual phasing out of temporary policy measures designed to support companies is one of the key concerns for 2021.

According to Euler Hermes, the rebound in insolvencies will start in the second half of 2021 along with the gradual phasing out of support measures for companies. The trade credit insurer's global insolvency index is expected to surge by +25% y/y globally in 2021 and by +29% in the Eurozone, mostly due to a base effect. In 2022, insolvencies should increase by +12% worldwide and +17% in the Eurozone.

Further, the pandemic will likely spark a period of innovation and market disruption, accelerating the adoption of technology, hastening the demise of incumbents and traditional sectors, giving rise to opportunities for new competitors.