According to a new sigma report from the Swiss Re Institute, global insurance premiums are set to grow at an annual rate of three per cent per year in 2025 and 2026, more than double the rate of the last 10 years, they state.
The report, Growth in the shadow of (geo)politics, adds that rising real wages, elevated interest rates in key markets, aging populations and a growing middle class in emerging markets continue to support global demand.
“According to the sigma report, consumers in advanced markets will increasingly pivot from fixed annuities towards index-linked policies in the following two years, as central banks lower interest rates,” they add in a statement about the report’s release.
Life insurance
In life insurance, the Swiss Re Institute forecasts 2.7 per cent annual premium growth in 2025 and 2026, below the long-term trend of 3.7 per cent. In non-life insurance, meanwhile, the institute expects a decade-high global premium growth in 2024 of 4.3 per cent. “In the following two years, premium growth is expected to decelerate, with global non-life premiums forecast to grow 2.3 per cent annually in real terms, below the 3.1 per cent average of the last five years.”
Investment results and still-elevated interest rates should support overall profitability of non-life insurance, they add. “Swiss Re Institute forecasts an industry return on equity at 10 per cent in 2025 and 2026 in the six largest non-life insurance markets, which would exceed the cost of capital.”
Non-life underwriting results are expected to stay strong during the forecast period. The global life insurance market, meanwhile, is “buoyant,” they add. “We project growth of more than twice the historical average at three per cent in real terms,” they write.
Inflation outlook
The report provides an extensive economic outlook and considers multiple scenarios, highlighting diverging macroeconomic conditions across different regions. The global inflation outlook is mixed, and reliant on the timing of coming policy shifts in the United States, they add. They also say geopolitics is the top risk to the institute’s baseline projections.
“We forecast global total insurance premiums to increase by 2.6 per cent on average in real terms in 2025 and 2026, after 4.6 per cent estimated growth in 2024,” they write. “Growth will be primarily driven by the life sector, although savings business growth will moderate as interest rates decline. Non-life insurance will grow more slowly than in recent years as the boost from the hard market tapers down.”
Overall, they say life and non-life premiums accounted for 43 per cent and 57 per cent of total premiums respectively in 2024. “We expect this mix to stay largely the same over the next decade.”
