Softening Non-Life Insurance Market Differs from Prior Cycle Downturns

While the non-life insurance market is softening, market changes are occurring in a different environment than previous underwriting cycle downturns, according to a new report from Swiss Re.

In a new sigma report, World Insurance in 2026: Shock absorbers in a fragmenting world, Swiss Re suggests that rising claims inflation, geopolitical uncertainty, and growing catastrophe exposures will likely limit the depth of the current market downturn.

According to the Swiss Re report, global non-life insurance premium growth is expected to slow to 0.6 percent in real terms in 2026, down significantly from the long-term trend of 3.6 percent over the period from 2015 to 2024.

Advanced markets are driving the slowdown in premium growth, Swiss Re said, while emerging markets remain relatively resilient.

Citing the impact of the current Middle East conflict on current market trends, Swiss Re said that the longer inflationary pressures from the Middle East conflict persist, the greater the risk that the effects of that inflationary pressure feed through to repair, replacement, and liability costs, partially offsetting downward insurance pricing pressure.

"This suggests that the current cycle may be shallower than past soft markets, with insurers likely to reprice more sharply if large losses, inflation, and capital signals deteriorate beyond expectations," a Swiss Re statement said.

Despite the softening pricing conditions and rising claims inflation, non-life insurance remains profitable, Swiss Re said. The Swiss Re Institute predicted that those insurers will post an 11.4 percent return on equity this year, down from a 14 percent peak in 2025 and slipping further to 7.7 percent in 2028.

"Still-elevated investment returns provide the main cushion against the underwriting cycle downturn," Swiss Re said.

On the life insurance side, the Swiss Re sigma report said insurers continue to benefit from a higher interest-rate environment. Global life premiums are expected to grow 2.3 percent in real terms this year, exceeding the long-term trend.

Swiss Re noted that the current Middle East conflict is the fourth major global supply shock in 6 years, slowing economic activity, raising inflation, and reinforcing a broader shift towards a more fragmented world economy. Against that backdrop, total global insurance premium growth is expected to slow to 1.3 percent in real terms in 2026 from 3.9 percent in 2025, Swiss Re said.