Global insurance premiums (non-life and life) are forecast to grow by 1.1% in 2023 and by 1.7% in 2024, despite economic slowdown. This is according to the Swiss Re Institute, whose latest sigma report suggests premium volumes could total a new peak of US$7.1trn in 2023, compared with US$6.8trn in 2022.
Swiss Re’s global economic growth forecasts are below consensus at 2.3% this year and 2.3% in 2024. The cumulative effect of over 18 months of rising interest rates, deteriorating credit conditions and further central balance sheet reductions will continue to dampen growth prospects, it says, with the risks to growth skewed to the downside.
“With inflation pressures still persistent, hard market conditions in non-life business are set to continue as insurers offset elevated claims costs with higher premium prices,” said Jérôme Haegeli, Swiss Re’s group chief economist. “Once disinflation takes hold with prices decreasing, less expensive claims and greater returns from interest rate sensitive investments should further support industry profitability”
According to the report, the greatest contributor to global economic growth overall in the coming years will be emerging Asia. With the reopening of China’s economy this year leading to a recovery in demand, Swiss Re forecasts emerging Asia to grow by 5.4% in 2023/24. Inflation remains the top global macroeconomic concern.
“In prior episodes of recovery in China, growth was mostly investment-led but we expect it to be driven by domestic consumption this year, especially from the service sector,” added Li Xing, head of insurance market analysis at Swiss Re. Hence, higher demand in China does not reverse our baseline outlook of global disinflation. This year’s recovery in China will have limited spill over impact on the global economy.”
Growth will be supported by India, Thailand, Indonesia and Malaysia, which are all set to boom in the coming years. Non-life premiums in emerging Asia are forecast to expand by 6.7% and 6.2% over 2023 and 2024.
The US remains the largest insurance market in the world, with total premiums of almost US$3trn in 2022, according to sigma data. Its global market share rose from 40% to 44%, driven by strong premium growth in nominal terms (8.6%) and US dollar appreciation against virtually all major currencies. China is the second largest market with premium volumes of US£698bn. The UK moved up to third place last year with premiums of US$363bn, switching position with Japan, which is now in fourth place.
