The Swiss Re Institute has published its most recent Sigma report, Risks on the rise as headwinds blow stronger: global economic and insurance market outlook 2024-25. In the report, the institute’s researchers say they expect the world economy to slow in 2024.
Major economies are diverging, they continue and geopolitics are playing a dominant role in this edition of the firm’s outlook.
“We forecast total global real premium growth at only 2.2 per cent annually on average for the next two years, below the pre-pandemic trend of 2.8 per cent (2018-2019) but higher than the average (1.6 per cent) of the past five years (2018-2022),” they write.
They say the pace of claims growth in non-life insurance is challenging the insurability of many risks. “We estimate that natural catastrophe insured losses are on track to reach USD $100-billion in 2023, for a fourth consecutive year,” they write. “We anticipate further hard market conditions in 2024 at least.”
In property and casualty (P&C), the firm is calling for 3.4 per cent real premium growth globally in 2023, up from its forecast of 2.6 per cent. Health premiums are expected to grow at 1.5 per cent and life premium growth, on average, is forecast to grow 2.3 per cent, up from estimates of 1.5 per cent.
“We estimate the industry will not earn its cost of capital in 2024 or 2025 in most markets,” they state.
In Canada specifically, total insurance premium real growth rate was 4.2 per cent between 2018 and 2019, growth was flat in 2022, is estimated to grow at just one per cent in 2023 and is forecast to grow at two per cent and 3.3 per cent in 2024 and 2025, respectively.
