Non-life premium growth to peak in 2024 as market hardening ends: Swiss Re

The non-life insurance market is expected to see decade-high premium growth of 4.3% this year following the hard market but, with premium rates moderating, growth is set to decelerate over the next two years to 2.3% annually, according to the Swiss Re Institute.

This compares with average premium growth of 3.1% over the past five years. In short, Swiss Re predicts the non-life insurance industry will see slower premium growth but more profit over the next couple of years.

“We expect decade-high 4.3% global non-life premium growth this year following the repricing of risk in response to elevated claims. Premium rates are now moderating and we forecast softer global premium growth,” says Swiss Re Institute in its latest sigma report.

But the report says that the active US hurricane season is likely to take global natural catastrophe insured losses to well over $100bn for a fifth consecutive year in 2024 and may “delay the onset of softer property insurance pricing”.

Further improvements in investment results from still-elevated interest rates should support overall profitability at non-life insurers. Swiss Re Institute forecasts an industry return on equity of 10% in 2025 and 2026 in the six largest non-life insurance markets, which would exceed the cost of capital.

The overall global primary insurance market is likely to see above-trend growth in the next two years as the non-life hard market reaches an inflection point and life insurance sales ease from recent highs, the report says.

Swiss Re forecasts 2.6% total global real premium growth on average in 2025 and 2026, down from 4.6% this year but higher than the average 1.6% over the past five years.

Steady global economic growth, resilient labour markets, rising real incomes as inflation moderates and still-elevated long-term interest rates will support insurance demand, it says.

Premium growth will primarily be driven by life insurance as interest rates remain higher for longer. Life premium is forecast to grow globally by 3% per year in 2025 and 2026, more than double the rate of the past ten years.

Swiss Re Institute forecasts that global economic growth is set to continue at a “solid pace” in the next couple years. It predicts global real GDP growth of 2.8% for 2025 and 2.7% for 2026, down from the 3.1% average in the pre-pandemic decade.

However, there are significant regional divergences and risks are skewed to more adverse scenarios amid heightened geopolitical tensions and trade policy uncertainty.

“We see higher inflation risks and chances of less interest rate cuts than previously assumed, particularly in the US given the election outcome and the continued strong economy,” says Jérôme Jean Haegeli, Swiss Re’s group chief economist.

The US election outcome of 2024 could also bring about greater divergences between countries in terms of growth and inflation. According to the sigma report, US real GDP is set to grow by 2.8% in 2024, by 2.2% in 2025 and 2.1% in 2026.

Meanwhile, European economies are at risk of being disproportionately affected by rising global trade tensions and the resulting uncertainty. European GDP growth is expected to underperform relative to the US and its own pre-pandemic trend. Swiss Re Institute sees the euro-area economy growing from 0.7% in 2024 to 0.9% in 2025 and 1.1% in 2026, with risks skewed to the downside.

Meanwhile, the Chinese economy is expected to undergo a structural slowdown in the coming years and see GDP growth moderate to 4.6% in 2025 and 4.1% in 2026.

The recent monetary easing and fiscal stimulus measures announced in China this autumn should help to shore up near-term business sentiment but are unlikely to solve longer-term structural issues, says Swiss Re.