Swiss Re Report Sees Global Premium Growth Rebounding in 2021

While global insurance premiums are projected to fall 1.4 percent this year, premium growth is expected to rebound swiftly in 2021 and 2022, supported by continued rate hardening, according to a new report from Swiss Re.

The new Swiss Re sigma report, "Rebuilding better: global economic and insurance market outlook 2021/2022," notes that this year's premium decline is below the 2.8 percent the Swiss Re Institute projected in June. The new report estimates that global premium growth will hit 3.4 percent in 2021 and 3.3 percent in 2022.

Swiss Re notes that world gross domestic product (GDP) is expected to contract 4.1 percent this year. Swiss Re forecasts global GDP growth at 4.7 percent in 2021, below the market expectation of 5.2 percent.

"In this context, the sigma study finds that, amid the economic shock inflicted by COVID-19, global insurance markets have been less severely impacted than expected in the Swiss Re Institute June 2020 forecast," Swiss Re said in a statement.

Insurance demand in advanced markets fared better than expected over the first half of 2020, Swiss Re said. The Swiss Re Institute now estimates that global non-life premiums will grow by 1.1 percent this year and recover to an average annual 3.6 percent growth in 2021 and 2022. Volumes are expected to be back to pre-pandemic levels by the end of 2021, Swiss Re said.

A hard market in Asia and the United States will boost premiums, according to the report, with China as the fastest-growing market with premiums increasing an estimated 10 percent annually over the next 2 years. Other emerging markets will see premium growth of nearly 4 percent annually, according to Swiss Re.

Rate hardening will continue, Swiss Re said, noting that non-life insurance pricing strengthened again in 2020, supporting the market's resilience in terms of growth and profitability.

"Market conditions from both the demand and supply sides point to continued pricing strength," Andreas Berger, CEO of Swiss Re Corporate Solutions, said in the statement. "The low interest rate environment and the ongoing social inflation in the United States will be key drivers of market hardening."