Mon, Sep 11th 2023
Swiss Re expects further growth in the global market for non-life reinsurance.
The increased number of storms occurring, demand more coverage among primary insurers, as the group announced at the industry meeting in Monte Carlo on Monday.
Losses from natural catastrophes have increasingly affected the balance sheets of property insurers and reinsurers in recent years. Major events such as the devastating earthquake in Turkey and Syria or “smaller” and increasingly frequent storms with hail, heavy rain or forest fires caused higher costs.
This trend is likely to continue, as Swiss Re emphasised on Monday at the “Rendez-Vous de September”. It can be assumed that there will be further years with insured losses of over 100 billion US dollars. In 2022, for example, storms cost the insurance industry around 125 billion.
Demand for reinsurance is growing
Swiss Re is convinced that demand for property reinsurance for severe weather events will remain high given the increasing risks. The non-life reinsurance market will grow faster than global gross domestic product (GDP). Over the next ten years, Swiss Re expects nominal annual market growth of 5.4 percent, or 3 percent adjusted for inflation.
According to Swiss Re, the reasons for this include, in addition to the more frequent extreme weather events, inflation, more expensive real estate and increasing urbanization around the globe. An important topic at this year’s industry meeting will be the increasing demand for reinsurance coverage and the capacities available on the market, it was said.
“Sustainable price level” achieved
However, climate change, the resulting changing parameters in the natural risk business and the increasing demand for cover require that the returns in this market are at an appropriately high level, demands Swiss Re. Thanks to recently rising prices, reinsurers have now found their way back to a “sustainable price level”.
However, readjustments would be necessary, for example in the way risk is shared between primary insurers and reinsurers, so that reinsurers can continue to be able to cushion peak risks and major catastrophes in the future. Primary insurers are better suited to absorb the costs of more frequent, smaller storms.
The smaller, secondary natural hazards have increased and are difficult for the industry to assess. To improve business management, Swiss Re is investing in the expansion of data and risk models and also sharing these with primary insurers. Data and analytics are also helpful for simplifying products or repositioning portfolios.
The annual meeting of representatives from the repatriation and insurance industry has been running in Monte Carlo since Saturday and runs until Wednesday (September 13th). Among other things, market and price developments in the industry will be discussed among the participants.
Keystone/SDA©
English 
German 
French 
Spanish 
Arabic