Global insurance premiums to exceed $7 trillion in 2022, says Swiss Re

Global insurance premiums to exceed $7 trillion in 2022, says Swiss Re

In nominal terms, global insurance premiums are poised to surpass USD 7 trillion for the very first time in 2022 on the back of 6.1% growth, supported by solid employment, income growth, the hardening P&C market environment, and elevated risk awareness for mortality and health risks following the COVID-19 pandemic.

profitable-growth-reinsuranceThis is according to Swiss Re Institute’s latest world insurance sigma report, which forecasts robust global insurance market growth in both 2022 and 2023.

While in nominal terms Swiss Re expects total premium volumes to exceed USD 7 trillion by the end of this year, the reinsurer warns that “a sharply slowing global economy and a multi-decade-high inflation will weigh on total premium growth”, with an expected below-trend 1.2% annual growth in real terms over the next 24 months.

However, claims costs are on the rise and this is extending rate hardening, which in turn is improving underwriting profitability and underpinning premium growth in 2023, says Swiss Re. Interest rates are also on the rise, and over time, this will lead to higher investment returns, further supporting industry profitability.

Jerome Haegeli, Swiss Re’s Group Chief Economist, commented: “Even in the face of a challenging economic environment, insurance remains a vibrant, resilient and growing industry – and reaching the USD 7 trillion mark for global premiums is a major milestone. However, these are not easy times, and the insurance industry will need to keep a close eye on inflation.

“As the world gets more expensive, so do the costs of accidents and natural catastrophes – and this makes claims more expensive. However, there is a silver lining, as central banks take action to combat inflation, higher interest rates will support insurers’ profitability in the medium term.”

Nominal, global insurance market growth of 6.1% would take total premium volumes 17% above the level seen at the onset of the COVID pandemic, which highlights the resilience of the risk transfer sector through the crisis.

By segment, Swiss Re expects to see stronger growth in non-life premiums, which are anticipated to expand by 7.1%, in nominal terms, in 2022, totalling USD 4.1 trillion globally. Once inflation is taken into consideration, Swiss Re forecasts growth of 0.8% for 2022. In 2023, the world’s largest reinsurer expects non-life premiums to expand by 2.2% in real terms, based mostly on continued rate hardening. The firm sees stronger growth in commercial lines than personal lines.

For life business, Swiss Re expects to see nominal growth of 4.8% in 2022, taking the total to USD 3.1 trillion for the year. However, in real terms, the firm expects total life premiums to contract by 0.2% this year, returning to growth in 2023. Swiss Re attributes growth next year to heightened risk awareness and demand for protection-type products post pandemic.

In terms of geographies, Swiss Re’s report finds that the U.S. remains the world’s largest insurance market, with total premium volumes of USD 2.7 trillion in 2021, a year in which premiums grew by 8.1%, in nominal terms.

China remains the second largest insurance market in the world with more than USD 700 billion in premium, which accounts for a significant 10.1% of total global insurance premiums.

In Europe, says Swiss Re, the UK and France produced strong nominal growth in 2021, with increases in total premiums of 16.7% and 24%, respectively.

The post Global insurance premiums to exceed $7 trillion in 2022, says Swiss Re appeared first on ReinsuranceNe.ws.

This content was originally published here.

Related Articles

Responses

Your email address will not be published. Required fields are marked *

WPGrow