Swiss Re expects global growth to shift down markedly

At a recent presentation by reinsurance company Swiss Re, Global Executive Dialogue: sigma/6 2023 Economic and Insurance Outlook 2024-2025, experts gathered say they expect the global economy to cool down noticeably.

“We do expect that the firm markets and the drivers which have been supporting insurance market prices, but also insurance market premiums, that they will remain intact,” says Swiss Re group chief economist, Jérôme Jean Hägeli. 

He says current prices, the price shock, is occurring because of the war in Europe, because of COVID-19 and also because of imbalances which already existed in the economy even before the pandemic took hold. “The price shock is here to stay,” he says.

Swiss Re further expects to see two per cent GDP growth globally. “We definitely see two per cent for the time being the ceiling of what is possible out there in terms of growth for this year.” Similarly, he says the company is also forecasting two per cent growth in premiums. “Premiums are going to grow stronger, no question about that,” says Hägeli. “I think our forecast for around 2.2 per cent is conservative.” He adds that the growth being observed is stronger than the average seen in the past five years.

“However, for insurance markets we should also, for the casualty lines obviously, watch very carefully how social inflation is developing. There, I would expect social inflation to go in a different direction than economic inflation.” 

Elevated mortality continues  

Julien Descombes, chief underwriting officer life and health reinsurance, meanwhile says the company continues to see excess mortality, between five and 10 per cent, in some of its more important life and health markets, including Canada. He attributes this to COVID-19 stresses, namely that COVID itself may be killing people still, but more to the fact that healthcare systems remain stressed with many behind in diagnostic and preventative care that would address the increased prevalence of cardiovascular diseases and cancer.

That said, he says Swiss Re remains optimistic about the long-term prospects for mortality improvements, thanks to medical progress and perhaps also to a growing awareness about the risks of obesity. “Obesity and diabetes are still on the rise. We think over the next 10 or 20 years, at some point we’ll plateau. We hope that there will be a bit of a wakeup call for the society and that people will start to have better metabolic health. This is a potential huge source of positive mortality gains in the future.”