Swiss Re has recently published its annual World Insurance Sigma Report, providing insights and forecasts for the global insurance industry. The report indicates that global economic growth is expected to be 2.3% in real terms for both this year and the next, which is slightly lower than market consensus.
The growth in the global economy is largely driven by emerging markets in Asia, with Swiss Re estimating a 3.3x emerging-to-advanced market economic growth multiplier for 2023. This figure is higher than the average of the past two decades, which stood at 2.2x. China, in particular, is anticipated to experience stronger growth this year, with an estimated rate of 5.4% due to the reopening of its economy.
In terms of the insurance industry, Swiss Re predicts its continued resilience over the next two years, the report said. Global insurance premiums, both in non-life and life segments, are projected to grow by 1.1% in 2023 and by 1.7% in 2024. This follows a decline of 1.1% in 2022. The report expects total premium volumes to reach a new peak of $7.1 trillion in 2023, compared to $6.8 trillion in the previous year.
“With inflation pressures still persistent, hard market conditions in non‑life are set to continue as insurers offset elevated claims costs with higher premium prices,” said Jérôme Haegeli, group chief economist at Swiss Re. “Once disinflation takes hold with prices decreasing, less expensive claims and greater returns from interest‑rate‑sensitive investments should further support industry profitability.”
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The United States maintains its position as the largest insurance market globally, with total premiums nearing $3 trillion in 2022, the report found. Its market share has increased from 40% to 44%, driven by strong premium growth in nominal terms (8.6%) and the appreciation of the US dollar against major currencies. China ranks as the second-largest market, with premium volumes reaching $698 billion. The United Kingdom has moved up to third place, surpassing Japan, with premiums amounting to $363 billion.
The report found that non-life premium growth is expected to strengthen this year, reaching 1.4%. Additionally, the non-life sector's return on equity is forecasted to rise to 7.8% in 2023, compared to 3.4% in the previous year, and further increase to 9.3% in 2024. The motor insurance market is showing signs of growth after three years of contraction, while there is a decline in health premiums due to the conclusion of pandemic support policies in the US.
In terms of regional trends, advanced economies are projected to grow by 0.8% this year, while emerging economies are expected to experience premium growth of 4.5%. China and emerging Asia, in particular, are forecasted to witness non-life premium expansions of 6.8% and 6.6%, respectively.
Last week, Swiss Re announced the appointment of Ali Shahkarami as global head of P&C solutions. The company also recently released its annual SONAR report on emerging risks.
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