“Even within the face of a difficult financial setting, insurance coverage stays a vibrant, resilient and rising trade – and reaching the $7 trillion mark for international premiums is a serious milestone,” stated Swiss Re’s group chief economist Jerome Haegeli. “Nevertheless, these aren’t simple occasions, and the insurance coverage trade might want to preserve a detailed eye on inflation. Because the world will get costlier, so do the prices of accidents and pure catastrophes, and this makes claims costlier.”
The worldwide economic system’s sharp decline, coupled with a decades-high inflation, will weigh on complete premium progress, Swiss Re warned, leading to a below-average 1.2% annual common progress in actual phrases over 2022 and 2023. It’ll improve declare prices for non-life insurance coverage, with profitability strain rising most in strains the place provide shortages are main to cost will increase on high of total inflation, similar to property and motor. Excessive wage and healthcare inflation can also be pushing up the price of claims for casualty and medical health insurance.
There’s a silver lining, nonetheless. “As central banks take motion to fight inflation, greater rates of interest will assist insurers’ profitability within the medium time period,” Haegeli stated.
Rising declare prices will lengthen fee hardening, in impact restoring underwriting profitability and paving the best way for actual premium progress in 2023.
Life premiums are forecast to extend by 4.8% in nominal phrases in 2022 and attain $3.1 trillion by year-end. Though this equates to a 0.2% contraction in inflation-adjusted phrases, they’ll return to progress in 2023. Heightened threat consciousness, demand for protection-type merchandise put up pandemic, and a subsiding quantity in COVID-19-related claims will assist improved profitability in life insurance coverage.
Non-life premiums will rise by 7.1% in nominal phrases in 2022 – a 0.8% progress accounting for inflation – reaching $4.1 trillion by year-end. Swiss Re forecast an additional 2.2% premium progress in actual phrases in 2023 based mostly on ongoing fee hardening, with business strains going stronger than private strains.
The US stays the most important insurance coverage market on the earth, with $2.7 trillion complete premium accounting for slightly below 40% of complete international insurance coverage quantity based mostly on 2021 numbers. It’s adopted by China, with $0.7 trillion in premium, or 10.1% of world insurance coverage quantity. Japan is available in third, accounting for five.9% of world insurance coverage quantity.
Rounding out the 5 largest insurance coverage markets on the earth are Europe’s strongest gamers. The UK accounts for five.8% of the whole international insurance coverage quantity and confirmed sturdy progress in nominal phrases in 2021, its complete premium volumes rising by 16.7%. France holds a 4.3% market share in international insurance coverage quantity however confirmed equally spectacular progress in complete premium volumes, which rose by 24% the identical yr.