Global insurance outlook ‘neutral’ amid economic uncertainty
The 2024 global insurance outlook remains neutral amid inflation and uncertain economy, Fitch Ratings reports.
Ongoing inflationary pressure and elevated interest rates will keep the insurance industry right where it is for the rest of 2024, according to a recent Fitch Ratings report.
With competition and limited price increases leading to the projection, the sector outlook worldwide remains neutral, Fitch Ratings Global Head of Insurance Cynthia Chan said in a recent statement.
Despite the economic woes, insurers currently benefit from higher premiums and improved margins as lapse risk decreases, the data showed. Meanwhile, growth opportunities are popping up in some markets with the U.S. and Continental Europe remaining near the top in sales for the sector.
“Our U.S. Personal outlook moves to improving reflecting continued results improvement,” Chan said in the Fitch report.
“Our German Non-Life outlook also moves to improving as inflationary pressures recede,” she added. “The unchanged improving outlook for global reinsurance and a few life and commercial markets reflects better pricing conditions and higher investment income offsetting these risks.”
According to the report, the cumulative effects of large rate increases and claims severity trends moved sales for U.S. personal lines higher. While personal lines premiums will continue to rise, other types of insurance in the U.S. such as mortgage insurance and title insurance will remain neutral as claim trends stabilize and carriers adapt to declines in market activity.
For the rest of the year, personal lines experts will keep an eye on market volatility, paying close attention to whether financial conditions tighten and depress asset values, market access, and refinancing costs. Experts will also watch for an “even-higher-for-even-longer” rate environment that increases risk to commercial real estate and alternative assets.
Other trends for insurance professionals to be mindful of as 2024 unfolds include ongoing interest rate volatility, deterioration in management of asset-liability, liquidity risks and capital buffers.
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