Swiss Re Institute’s latest report indicates that inflation remains insurers key concern and the effect on the global economy has led to total global insurance premium falling slightly by an estimated 0.2% in real terms in 2022.
Looking ahead, Swiss Re Institute expects the industry to return to premium growth of 2.1% annually on average in real terms in 2023 and 2024, supported by a combination of easing inflation, market hardening in property and casualty lines, and stronger life insurance demand.
The silver lining for the industry lies in anticipated investment results due to central bank rate rises.
Jérôme Haegeli, Swiss Re Group chief economist said: “In our view, the global economy will cool down noticeably under the weight of inflation and interest rate shocks. The repricing of risk in the real economy and financial markets is actually healthy and a long-term positive. Higher risk-free rates should mean higher returns for investing into the real economy. During today’s challenging times – and for the economic recovery period ahead – the insurance industry can show its value as it provides financial resilience at all levels of the community.”
According to Swiss Re Institute, major economies, notably in Europe, are likely facing inflationary recessions in the next 12–18 months amid higher interest rates. Global GDP growth is forecast to slow to 1.7% in 2023, from 2.8% in 2022.