US Tariffs to Slow Global Economy and Insurance Premium Growth

US tariff policy is expected to slow both global economic growth and insurance premium expansion, according to Swiss Re Institute's latest World Insurance sigma report. Inflation-adjusted global gross domestic product (GDP) growth is projected to fall to 2.3 percent in 2025 and 2.4 percent in 2026, down from 2.8 percent in 2024. Insurance premiums are forecast to grow just 2 percent in 2025, recovering slightly to 2.3 percent in 2026, after expanding 5.2 percent in 2024. 

"While insurers' profitability outlook is still benefiting from rising investment income, we expect tariffs to slow global GDP growth, and consequently weigh on insurance demand," Jérôme Jean Haegeli, group chief economist at Swiss Re, said. "In the long term, US tariff policy is another move towards more market fragmentation, which would reduce the affordability and availability of insurance, and so diminish global risk resilience." 

The report describes tariffs as a stagflationary shock to the US economy, projecting GDP growth to decline to 1.5 percent in 2025 from 2.8 percent in 2024. Swiss Re anticipates a mild rebound to 1.8 percent in 2026 as the economy adjusts to higher tariff rates and labor markets stabilize. The shift toward reduced global flows of goods, services, capital, and labor is seen as a long-term constraint on economic potential. 

In Europe, policy uncertainty is expected to hold growth flat at 0.8 percent in 2025, with improved prospects in 2026 due to fiscal easing in Germany and potential rate cuts from the European Central Bank. China's growth is forecast to slow from 5 percent in 2024 to 4.7 percent in 2025 as trade tensions and uncertainty persist. 

Swiss Re said the global insurance industry is facing headwinds, with life insurance premium growth slowing to 1 percent in 2025 from 6.1 percent in 2024, before rebounding to 2.4 percent in 2026. Non-life premiums are expected to rise 2.6 percent in 2025, down from 4.7 percent in the prior year, driven by competitive pressures in personal lines and softening in commercial markets. 

US motor physical damage insurance is expected to be the most directly impacted segment, as tariffs raise the cost of imported auto parts and vehicles. Claims severity in US motor is forecast to increase by 3.8 percent in 2025—still below post-pandemic spikes of 14 percent in 2021 and 13 percent in 2022. 

Swiss Re noted that while fragmentation raises costs and capital inefficiencies, some underwriting opportunities may arise. Demand could increase for credit and surety insurance in volatile environments, and marine insurers outside the United States could benefit from shifting trade patterns. Stimulus policies in the European Union and China may also support insurance demand. 

The United States remained the world's largest insurance market in 2024 with $3.5 trillion in premiums, accounting for 44.8 percent of global market share. China followed with $792 billion, and the United Kingdom ranked third at $485 billion.