Global insurance industry has ‘reached a new equilibrium’, Swiss Re says

Written by Adam Cadle

16/07/2024

The global insurance industry has “reached a new equilibrium” after the challenges of recent years. Swiss Re’s group chief economist, Jérôme Haegeli, said.

Geopolitical tensions and higher inflation have led to economic concern in recent years, however, Haegeli said the global economy has surprised on the upside, “which should drive more demand for insurance”.

“The life sector in particular is one to watch as higher interest rates drive investment income and consumer demand for annuities, giving more people secure retirement incomes.”

In its latest World Insurance sigma report, Swiss Re Institute has forecast a 2.9% premium growth for the industry by the end of 2024, reaching a total premium pool of US$3trn. Similar growth of 2.7% is expected in 2025 and strong rebounds in growth should be visible in many key markets, the Institute stated, with Western Europe and advanced APAC returning to premium growth.

Swiss Re said a significant growth area for life insurance is the uptake of annuities to boost retirement savings. In the US, for example, sales of fixed rate annuities jumped 63% in 2022 and 36% in 2023. Longer term, advanced markets are expected to contribute half of all additional premiums over the next 10 years, driven by strong growth in annuities. For 2024, Swiss Re Institute has forecast that the combination of increased premium and increased investment income will boost profitability in the life sector, with the operating results across eight top markets increasing 15% for the year.

Non-life premium volume is forecast to build on the 3.9% growth achieved in 2023, reaching US$4.6trn in 2024 and US$4.8trn in 2025. P&C insurers are expected to improve profitability in 2024, with industry-wide return on equity (ROE) across eight major market at 10% so far this year, up from 6% in 2023. ROE of above 10% is forecast into 2025.

Related Articles