In its latest global outlook, Swiss Re says insurers face a seismic regime shift - one defined by persistent inflation, fragile growth, and escalating climate threats. Unveiled at the reinsurer's "Shifting Sands" Global Economic and Insurance Market Outlook conference, the forecast for 2026 and 2027 points to slower growth, stickier inflation, and intensifying climate risks.
"Even if the road ahead looks like a straight line, there's massive uncertainty beneath the surface," said Jerome Haegeli (pictured), Swiss Re's group chief economist. "The key takeaway is that we're not going back to the old world of low inflation, low interest rates, and financial repression."
Haegeli outlined several structural shifts redefining global markets, starting with fiscal dominance. Governments worldwide, excluding the UK, are running historically high fiscal deficits, pushing economies into a new policy era where monetary authorities may become more accommodative.
"We expect inflation to remain structurally higher," Haegeli said. "Two per cent is no longer the ceiling - it's the floor."
This shift has profound implications for insurance portfolios, particularly in pricing and reserving strategies. Persistently high inflation, especially in the UK, could continue to drive up claims costs, notably in construction and repair sectors.
Charlotte Mueller, chief economist for Europe, noted: "Even if the headline number looks encouraging, don't underestimate also some of the specific price categories."
She added: "Now, we had some good news that CPI has been easing a bit in the UK to 3.6%. But the key message that we want to stress is that inflation still is sticky and very persistent in the UK, especially when you compare it to the eurozone."
Global GDP growth is expected to slow to around 2.5% through 2027, with the US outperforming Europe and the UK. However, Swiss Re sees an upside in the ongoing wave of re-industrialisation and capital expenditure, driven by supply chain realignment and industrial policy.
"We're seeing a CapEx boom that is not just AI-driven," Haegeli said. "That creates commercial insurance opportunities. Industrial policy is now economic policy."
In the UK, Mueller identified productivity as a major concern. With government budgets constrained, she argued for a larger role for private institutional investors including insurers, in supporting national infrastructure.
Jason Richards, CEO of P&C Re UK and Ireland, reinforced this message: "Insurance capital isn't just for claims. It's for building resilience. And right now, the UK needs that in housing, transport, and energy."
Climate risks also loomed large over the outlook. In 2025 alone, insured nat cat losses are projected to exceed $100 billion globally. The UK has seen rising flood risk, outpacing wind exposure, with secondary perils becoming primary threats.
"Flood defences were designed for a different climate," Richards said. "We welcome the government's renewed commitment to adaptation, but the scale of the challenge is enormous."
He added: "It's clear that the defining risk of our time the last few years has been natural catastrophes. And we look at 2025 as an example. So we started the year with the wildfires in LA... then Hurricane Melissa struck in Jamaica in October... followed by another typhoon in the Philippines. So the year has been again very, very active."
Richards also praised FloodRe: "The UK also has a very strong success story in the form of FloodRe, which is a public-private partnership between the sector and the government, and it has enabled us to protect over half a million householders that would not be protected for flood insurance."
Swiss Re also sees AI as a game-changing force. An internal study of nearly 190 insurer use cases revealed that AI is already reshaping distribution, underwriting, operations, and claims.
"It's not without risks, algorithmic bias and litigation are real concerns," Haegeli said. "But the speed of adoption and impact on efficiency is unlike anything we've seen."
He warned that AI market valuations may be vulnerable to correction: "They are bubbly. No question about that. But if I look at the AI valuations compared to the dot-com era... it doesn't look extraordinary either."
As geopolitical risk, economic imbalances, and climate volatility converge, Swiss Re’s core message was clear: insurers must redefine their role as partners in resilience.
"Resilience is not a luxury," Richards concluded. "It's an investment in the future. And our industry has both the capital and the responsibility to lead."
Swiss Re's central forecast sees global insurance premium growth stabilising at around 2.2% through 2027, supported by rising life savings demand and higher-for-longer interest rates. But the real opportunity, they argue, lies in how the industry embraces uncertainty, and helps society adapt.
Three takeaways for brokers and insurers
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