Global insurance premiums will exceed $ 7 trillion for the first time by mid-2022, with ongoing rate tightening in commercial non-life insurance lines providing further support.
This is what reveals a report published by the Swiss Re Institute entitled Sigma: Turbulence after take-off: outlook for the global economy and insurance market 2022/23.
The report predicts that the premium will rise to 3.3% in 2022 and 3.1% in 2023 due to the growing awareness of risks in the life and non-life segments which pushes consumers and businesses to seek further protection. to the shock of COVID-19. pandemic and above-average natural disasters.
Highlights of the report
- The consequences of the pandemic have made it clear that the insurance sector plays the role of risk absorber in times of crisis by providing financial assistance to households, businesses and governments.
- Global supply chain disruptions highlight the need for better protection to improve the resilience of society.
- Climate risk is always at the forefront given extreme weather events and above-average insured losses from natural disasters, which has made the race to net zero carbon more urgent.
What to expect in 2022
- As the industry absorbs COVID-19 claims, above-average catastrophic claims and high inflation, Swiss Re expects a strong rebound from 2022.
- Profitability on non-life underwriting is expected to recover quickly as insurers internalize expectations of higher inflation and commercial lines rates rise again.
- Progress in COVID-19 vaccinations is expected to boost profitability after a year of high mortality for life insurers,
- Investment returns will likely be compromised by low interest rates that do not fully offset inflation, making underwriting discipline crucial.
Commenting on the report, Jérôme Haegeli, Chief Economist of the Swiss Re Group, said: “Market conditions suggest that positive price dynamics will continue across all lines and regions. The increase in claims caused by inflation in all lines of business, continued social inflation in the United States and the persistence of low interest rates will be the main factors in the tightening of the market. “
The study suggested that the outlook for the insurance sector is also boosted by a strong cyclical recovery from the COVID-19 shock, but economic growth is expected to slow over the next two years due to a price crisis in the industry. current energy, prolonged supply the problems and inflation risks.