A new report from Swiss Re Institute has forecasted that global P&C premiums are expected to more than double to US$4.3 trillion (around SG$5.77 trillion) in 2040, from US$1.8 trillion (around SG$2.42 trillion) in 2020.
In its study, ‘More risk: the changing nature of P&C insurance opportunities to 2040’, Swiss Re Institute suggested that this jump in premiums is anticipated as the P&C portfolio composition is also expected to shift from lower-risk motor insurance towards higher-risk property and liability lines.
The institute also noted that property insurance is forecasted to become the fastest growing line of business. And while its share is shrinking, motor insurance is expected to remain the largest of all P&C lines, with premiums anticipated to nearly double by 2040.
Property insurance is expected to grow by 5.3% annually with global insurance premiums increasing to US$1.3 trillion in 2040, Swiss Re Institute said, from US$450 billion in 2020. According to the institute, economic development will remain a key driver of rising property premiums, contributing 75% or up to US$616 billion of new premiums.
Meanwhile, climate-related risks are expected to result in a 22% increase in global property premiums, or up to US$183 billion over the next 20 years as the severity and frequency of weather-related catastrophes increase.
"Promoting the conditions for long-term sustainable growth is particularly important in the face of climate change, which poses the biggest long-term threat to the global economy,” commented Swiss Re group chief economist Jerome Haegeli. “If we are to build a sustainable insurance system that allows society to manage and absorb future risks, we need to make risks and opportunities quantifiable. Our work is also vital for policymakers with whom we share the aim of making economic growth insurable."