Global premiums to surpass $7 trillion, non-life profits pressured

Hardening rates in property & casualty lines, strong employment and income growth and more awareness around mortality and health risks will converge to drive global insurance premiums past $7 trillion this year, setting a new record, according to Swiss Re.

“Insurance remains a growing industry — and reaching the $7 trillion mark for global premiums shows is a major milestone,” Jerome Jean Haegeli, group chief economist, Swiss Re, said in a report. “However, these are not easy times and the insurers will need to keep a close eye on inflation and economic growth.”

Additionally, central banks around the world are raising in an attempt to achieve price stability. These interest rate hikes should improve investment return for insurers, according to Swiss Re, which anticipates higher rates of inflation for the coming decade than what was seen in the previous 10 years.

Non-life insurance sector profits will be pressured by higher property and auto claim costs, Swiss Re reported. Supply shortages and labor disruptions will also pressure claim costs for the remainder of 2022.

These rising costs will work to further rate hardening, which along with inflation of exposure values will boost premium growth in 2023.

Commercial P&C lines are expected to continue expanding faster than personal lines, including health, according to Swiss Re, which anticipates commercial premiums to increase 1.1% this year and 3.1% in 2023. Personal lines premiums will be relatively flat, expanding 0.5% in 2022, due to slower performances in advanced markets.

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