Further growth expected for the global insurance industry
Published: Tuesday, Nov 21st 2023, 09:50
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The global insurance industry should continue to grow next year and the year after. Coupled with the prospect of rising investment returns, the economists at reinsurer Swiss Re also expect profitability to improve again.
The Swiss Re Institute expects premium income in the insurance industry to increase by an average of 2.2% in 2024 and 2025, according to the Sigma study published on Tuesday. For 2023, the increase is estimated at 1.5 percent, while the five-year average from 2018 to 2022 was 1.6 percent.
Thanks to rising investment returns and higher insurance rates, profitability in the sector will also improve, the report continues. In most markets, however, insurance companies will still not be able to cover their capital costs. The reason for this is inflation and the associated higher claims costs.
Climate change as a factor
Natural disasters, which are becoming more frequent and more severe as a result of climate change, are a key factor. Swiss Re experts expect insured losses to exceed the USD 100 billion mark for the fourth time in a row this year. Although there have been no very expensive hurricane disasters, there have been significantly more secondary natural hazards such as fire, hail and heavy rain.
In its baseline scenario, the Swiss Re Institute assumes that global economic growth will weaken by 0.4 points to 2.2% in real terms in 2024 and that the risk situation will have deteriorated due to the conflict in the Middle East. However, thanks to strong finances, insurers are better protected against macroeconomic and geopolitical risks than other sectors, according to the report.
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